TaxTMI 
TaxTMI 
My client sold a flat and received a cheque for advance booking amounts on 27.05.2016. He did not pay service tax on this amount. Subsequently, a flat booking was cancelled, and my client returned the advance booking amounts on 29.03.2019. Kindly suggestions grounds, cases for filing appeal.
Service tax on cancellation of a flat booking
05 Jun 2026 
7 Replies 
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Service tax on cancelled flat bookings turns on whether consideration was refunded and no taxable service was ultimately rendered.
Service tax on advance booking amounts is discussed where a flat booking is cancelled and the entire consideration is refunded. The commentary states that, once the transaction is rescinded and no service is ultimately rendered, the amount no longer has the character of taxable value and the levy on the cancelled booking does not survive. It further notes that, even if tax was initially payable on receipt of the advance, adjustment or credit may be available under Rule 6(3) of the Service Tax Rules, 1994 when the service is not provided and the amount is refunded. (AI Summary)
Service tax on advance booking amounts is discussed where a flat booking is cancelled and the entire consideration is refunded. The commentary states that, once the transaction is rescinded and no service is ultimately rendered, the amount no longer has the character of taxable value and the levy on the cancelled booking does not survive. It further notes that, even if tax was initially payable on receipt of the advance, adjustment or credit may be available under Rule 6(3) of the Service Tax Rules, 1994 when the service is not provided and the amount is refunded. (AI Summary)