Dear all,
Case 1
There are some invoices in the customer account and there are some receipts in the customer account which are not adjusted against invoices, further the dr. balance is more than the credit balance
case 2
customer pays excess money than the invoice hence there is a net credit balance in the account , which he may adjust when some invoice is raised at a future date hence the customer account shows a credit balance
As per service tax act "advance money received is subject to service tax "
querry
our company classifies the above two as advance money and pays service tax on the credit balances in the customer account?
My contention is both are not advances for payment of service tax . First case the credit balance if adjusted against the debit there is no advance. In the second case the excess money is a liability for the company and the money is to be returned to the customer hence no service tax is to be paid on the above two cases
Please quickly clarify whether my contention is correct or not
Regards,
G.Kannan
CAclubindia
