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2015 (12) TMI 1222 - AT - Service TaxDemand of service tax on advances received - whether advances received by the appellant from their customers for contracts executed for customers are leviable to Service Tax - Held that:- Account books of the appellant indicate that the advance received is shown as current liability and not as income towards sale/provision of service. Therefore it is not towards value of services provided. The advance is proportionately transferred to sale/confiscation of service in the books as and when the appellant raised invoices on the customers. We find that the order of Commissioner is silent in this respect. The advance is only an amount given as kind of earnest money and for which the appellant gives a bank guarantee to the customers of equal amount. It is more in the nature of a deposit - advance is like earnest money for which a Bank Guarantee is given by the appellant. It is a fact that the customer can invoke the Bank Guarantee at any time and take back the advance. Hence the appellant does not show the advance as an income, not having complete dominion over the amount and therefore the same cannot be treated as a consideration for any service provided. Therefore the findings lack appreciation of the complete facts and evidences. - advance is not received towards taxable service. The advance is the customer's obligation as his part of the mutual commitment between the two parties to honour the terms of the contract. In respect of some customers, the invoices are not issued for periods ranging upto two years after receipt of advances. The defence of the appellant is that these amounts are shown as current liability in their books of accounts and no services have been provided as yet by them. The Commissioner neither refers to these details nor gives any findings on this issue. Therefore we find no reason to disbelieve the statement of the appellant and take it that the Commissioner too does not dispute this fact. In any case it is on record now that the appellant have paid service tax on the unadjusted advances in July 2011. - impugned order has no merits and is liable to be set aside - Commissioner, in the adjudication order, did not dispute the fact that the service tax was paid periodically on invoice value and that the advance was adjusted in each invoice reducing the outstanding amount correspondingly. The Commissioner only determined that service tax is payable on the advances. We have already expressed our view that the service tax was not required to be paid on the advances and further when the amounts of advance were adjusted proportionately in the invoices and service tax was paid on the invoice value. - impugned Order is set aside - Decided in favour of assessee.
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