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Till 13th May, 2005, section 67 provided that value of taxable service shall be the gross amount charged for services rendered. The section 67, as amended w.e.f. 13-5-2005, provided that value of taxable service shall be gross amount charged by service provider for taxable service provided or to be provided by him. Explanation 3 was added to this section w.e.f. 13-5-2005, which specifically declares for removal of doubt, that gross amount charged for taxable service shall include any amount received towards the taxable service before, during or after provision of taxable service.
Section 67(1)(i) (as substituted w.e.f. 18-4-2006), also provides for payment of tax on ‘service provided or to be provided’.
Section 65(105), as amended w.e.f. 16-6-2005 starts with words ‘taxable service means any service provided or to be provided’.
After 13th May 2005, service tax will be payable as soon as advance is received, even if service is provided later - view confirmed in MF(DR) circular No. B1/6/2005-TRU dated 27-7-2005 para 27. Till 13th May 2005, the provision was that service tax was payable only when service is actually provided.
Thus, service tax will be payable on advance received also w.e.f. 13th May 2005.
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