A deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for said supply
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"applies such deposit as consideration for said supply": it means adjusting such deposit amount against dues payable by him (who deposited the money).
Like the deposit for utility services e.g. electricity, water. When you apply for disconnection, they adjust with your dues if any and pay the balance.
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