We are undertaking execution of interior work as per the drawings provided by the Architect. We have registered under Interior Decorator Service. The department says that since we are not giving any advice or consultancy our services are taxable under Construction (Finishing and Completion) Services and ST is payable on gross value without abatement. Is that correct?
Secondly, Tax is being arrived on the following method.
Sales as per Balance Sheet 10872500 *Labour Charges received 2065265 Advances received 1065208 TDS deducted 565902 Total 14568875 Value on which VAT paid @ 12%(-) 2586966 Sundry Debtors (-) 1065896 Total Taxable Value 10916013 Cum tax Value 9715212 ST payable 12.36% on 9715212 = 1200800
*Pure labour charges without any material involvement
My doubt is
Is TDS is includable in the Value?
We are charging ST in our invoices. But ST is calculated on the receipt basis? In such a case is cum-tax value is applicable?
10 December 2010
In the first place, your registration as a service provider depends on the nature of the service rendered and not on nomenclature. Section 65(59) of the Finance Act, 1994 defines "Interior decorator" as 'any person engaged whether directly or indirectly, in the business of providing,by way of advice, consultancy, technical assistance OR in any other manner, services related to planning, design or beautification of spaces whether man-made or otherwise and includes a landscape designer'.
Section 65(105)(q)defines the taxable service provided by an interior decorator as being 'in relation to planning, design or beautification of spaces, whether man-made or otherwise, in any manner.'
15 December 2010
Due to some problem in our office system, the lines were down for a few days and the reply not fully uploaded.
Hence if an interior decorator does any of the functions mentioned in the definition, the person would be treated as interior decorator. It is not necessary that all the functions be carried out by the person, because the word used in the definition is "or" and not "and". Hence the contention of the assessing officer appears to be flawed and if you are involved in the work of beautification of spaces, whether man-made or otherwise, in any manner, then your registration should be as "interior decorator" and not otherwise.
To be rendering the services of "completion and finishing services" of Construction sections 65(25b) and 65(30c) define 'completion and finishing services' as under:
"completion and finishing services such as glazing, plastering, painting, floor and wall tiling, wall joinery and papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services in realtion to building and civil structure".
In case your services are in the nature of this definition, you would require registration for two separate services viz. Commercial & Industrial Complex Construction Services and Construction of Residential Complex Service separately.
In case you are registered under either of the services, in case of bills raised by you for these services, the availing of abatement of 67% in case of material and labour bills and 75% in cse the land value is included IS AT YOUR OPTION. THE DEPARTMENT CANNOT DENY THIS ABATEMENT TO ANY ASSESSEE REGISTERED UNDER THE RELEVANT SECTION AS A SERVICE PROVIDER.
Tax Deducted at Source is a part and parcel of the receipts and hence subject to Service Tax.
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