Fate of services tax paid on advance received from customer under GST

[Prakash Gupta]

Dear Expert,

Need your help on below mentioned issued under GST. Brief facts and query is as under:

The company is in business of project construction since year 2015. It has received mobilization advance of Rs. say 10 Crore in January 2017 ( before GST regime) and on which it paid service tax as per the applicable rate.

Now under GST regime the company will raise invoice and willing to set off its GST liability with earlier service tax, which has been paid advance received.

With the above mentioned background, my query is as under:

“whether service tax paid on advance received from clients can be set off with GST liability ? if yes, then how and where this advance amount need to show in Trans-01 ?

AI Summary

Service tax transition: prior service tax on mobilisation advance recoverable through transitional claim and adjustment under GST.
Service tax paid on a pre-GST mobilisation advance is governed by point-of-taxation rules and transitional mechanisms. For a pure mobilisation advance where services commence under GST, the contractor should use the transitional claim under section 142(11)(c) to account for or return the service tax collected/paid; the recipient must ensure refund or adjustment and reverse any pre-GST service tax credit accordingly. TRANS-1 does not apply to the cash component of mobilisation advances and transitional filing should follow the prescribed claim and adjustment process.