Taxes paid / payable

First of all Tax may be IT or Vat or service are exppenses for the current year and cannot be taken to the balance sheet as assets.

Dear

First of all the Taxes (except Income Tax)  viz., Service tax, VAT etc you are acting as an agent to the Govt/Deprt. YOu are collecting from your client/customer & paying tothe respective department/s. Keep that in mind and make Ledgers in such a way to finalise these.

In your case it seems that your query pertains to "Why to account taxes paid as advances?" as it resembles.

So the answer would be as follows: -

For every transaction their will be double effect, the effects are as follows: -

if there is any Increase in asset than 

Either there will be decrease in any other asset 

                      or

Increase in other liability.

Same with the liability ie.,

Increase in liability will effect as

Either decrease in any other liability 

                or

Increase in any other asset.

So though advance tax payment is our duty but not liability.

Hence while making payment through cash or bank there will be a reduction of an asset but the same thing (i.e., advance tax) cannot be treated as liability. Hence it will be recorded as asset again.

Though the explanation above is bit requires extensive understanding of accounting effects, you can PM for any further queries or reply with an elaborated query.