Service tax on Advance payment received

Hi Shruti As per your Query If you received the payment ( it may be advance) you are liable to pay the Service tax . But Cenvat Credit is adjusted after making payments to your vendors.

As you know the Service tax is on payment basis.

Dear Shruti,

First of all if your client is a clubs / association please ensure that the payments are made under protest as the question of whether one can provide service to oneself is not resolved judicially under service tax.

ST is payable on advances. Therefore you may have to pay in cash. Next quarter the credit could be used. The issue on whether ST can be collected on advacnes as per some experts requires constuitutional amnedment since entry 92 C only talksh of tax on services provided and not for those to be provided. Presently preferable to pay.

Thanks Madhukar

Yes we are a Residents welfare Association, which offers Maintenance and upkeep services to the residents. After a lot of deliberation it was concluded that since are monthly receipts exceeds Rs. 3000pm we are taxable under service tax sec 65(105)(zzze). We have outsourced these services like security, Housekeeping, Maintenance, Horticulture to different agencies. We collect from residents and pay to these agencies who charge service tax on their bills. Hence end to end we do not have to pay any service tax as the CENVAT from agencies covers it. But it is the cash flow model (credit period)  that is affecting and is requiring us to pay Service tax. This in turn is affecting our cash flow planning.

Can some how this be solved?

Dear Shruti,

AS I can see the only solution is to see if the security, houskeeping etc  provided by the 3rd parties per month if taken as reimbursment only and the other services provided separately and if the other services are less than 3k per m then the exemption itself would be available. Care to be taken to see that the condition in 5(2) of the STVR are met.

Dear Madhuker,

In contineuation of the above quarry, pl. guide me if I am a pvt. ltd. co. and provide security service and housekeeping service to a trade association in which about 80 shops are there, both service charges decided sepretely like for security service Rs. 1,70,000/- P.M. and for House Keeping Rs. 60,000/- P.M. Can we charged service tax on both the services? 

We have paid advance service tax in march-2012. how many month we are utilise of my service tax amount.