Advance Payment

Sir i like to draw your attention towards wording of Sec. 67

Sec.67: For the purpose of this Chapter, the value of any taxable service shall be the gross amount charged by the service provider for such service provided or to be provided by him.
 
Explanation: 3 (inserted in Sec.67) – For the removal of doubts, it is hereby declared that the gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after provision of such service.

In your case amount received Rs. 500000 is consider as gross amount received i.e. inclusive of service tax and need to pay service tax accordingly.

If i am wrong pls correct me.