Service Tax on Advance Rent

This query is : Resolved

Yogesh Rathee (Querist)
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15 October 2007 Hello,

I want your opinion on the following situation:

A company paid advance rent before june 07 as the service of rent become taxable and this rent is adjustable in the total amount of rent payable every month upto 36 months.

Can the company require to pay the service tax on the amount of advance rent.

ii) The service of rent become taxable from 1st of June 07 but what happen if a company get the registration in the month of October. Is the company require to pay the service tax from 1st of June or it can book the liablity once upto 31st of Oct and thereafter on monthly basis. And can it follow the same procedure on the credit also.

So please give your opinion on the above mentioned matter in urgent.

Thanks

R.V.RAO

R.V.RAO (Expert)
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16 October 2007 AS PER SERVICE TAX ACT CIRCULAR NO 65/14/2003-ST DT 05-11-03, THE TREATMENT OF ADVANCE TAXABLE SERVICES RECEIVED IS AS FOLLOWS:
"WHERE THE VALUE OF TAXABLE SERVICES HAS BEEN RECEIVED IN ADVANCE, FOR A SERVICE WHICH BACAME TAXABLE SUBSEQUENTLY, SERVICE TAX HAS TO BE PAID ON VALUE OF SERVICES ATTRIBUTABLE TO THE RELEVANT MONTH/QUARTER WHICH MAY BE WORKED OUT ON PRORATA BASIS"
AS REGARDS REGISTRATION UNDER SERV. TAX ACT IN OCTOBER 07,
THE BASIS OF TAXABLE SERVICE IS THE AGREEMENT OF TAXABLE SERVICE ENTERED BETWEEN SERVICE PROVIDER AND SERVICE RECEIVER.
IF THE AGREEMENT IS WEF JUNE 07,YOU ARE LIABLE TO COLLECT AND DEPOSIT SERV. TAX ACCORDINGLY.
EVEN IF THE SERVICE PROVIDER FAILED TO COLLECT SERV. TAX FROM THE SERV. RECEIVER ,THE SERV. PROVIDER IS STILL RESPONSIBLE FOR PAYMENT OF THE TAX TO THE GOVT.
R.V.RAO