If the customer has paid 100% advance irrespective of completion certificate or possession before the cut off date i.e. 1-7-2010, then service tax will be imposed or not?
As a general principle, tax liability will be on the basis of construction services provided on or after 1-7-2010 and not on the basis of advance received. However, as per Notification No. 36/2010-ST dated 28-6-2010, in respect of service as per amended definition, if any advance payment was received prior to 1-7-2010, for service to be provided after 1-7-2010, service tax will be fully exempted This is a good transitory relief to service providers as well as customers [This provision applies only in respect of services covered under amended definition and not to those services which were already covered under earlier definition]. Thus, if advance payment was received prior to 1-7-2010, service tax will not be payable even if service in respect of that advance is provided after 1-7-2010.
