Service tax is applicable on advance payment to companies

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the customer not to charge central sales tax (CST) on the sale, as the garments purchased from us would be exported by him. We are aware that CST is not payable on export sales, but is the same applicable when sales are made to an exporter within India?

When a dealer purchases goods for the purpose of export, CST is exempt on the sale of same goods immediately preceding the actual export of goods. For this purpose, the purchasing dealer is required to issue a statutory declaration in ‘Form H’ to the selling dealer. The purchasing dealer is eligible to issue ‘Form H’ only if he purchases goods after and in order to meet the requirements of an existing export order, and does not undertake any further processing or modification of the goods. Therefore, in case the export house is in a position to issue ‘Form H’, you may not charge CST on such sales, subject to fulfilment of prescribed conditions and statutory obligations.

We are an IT company rendering software development and call-centre services to clients in India and abroad. We have decided to rent out premises constructed recently to another company rendering BPO-related services. We understand there would be service tax liability on letting out of the premises. We would like to know if we could avail cenvat credit of service tax paid on the services used for constructing the said premises, for payment of service tax on the rental income.