Service tax or sales tax
This query is : Resolved
11 July 2015
Dear Friends,
A client doing the Business of Laundry for Factory work wears. They are charging the amount based on the no. of wash every month.
The client also providing Locker from his own for handling such work wears. The Rent Charged for is on the basis of cup Board size given.
Both are Billed in same invoice.
Whether It will affect Service Tax or VAT?
Kindly give your feedback.
A client doing the Business of Laundry for Factory work wears. They are charging the amount based on the no. of wash every month.
The client also providing Locker from his own for handling such work wears. The Rent Charged for is on the basis of cup Board size given.
Both are Billed in same invoice.
Whether It will affect Service Tax or VAT?
Kindly give your feedback.
11 July 2015
Renting the work wears and Lockers at customer's factory.
11 July 2015
Only service tax will be attracted provided the total value exceeds 10 lacs.
Message likes :
1 times
11 July 2015
sir,
under what service Category we have to pay service Tax?
under what service Category we have to pay service Tax?
11 July 2015
In karnataka some of the client says, that it is Job work charges and VAT will apply.
whats your opinion.?
whats your opinion.?
12 July 2015
On Laundry Charges, Service tax is applicable.
On renting of lockers- as it is at the customer's location, VAT is applicable under renting/leasing of goods.
Regards,
CMA Santosh G Kalburgi
On renting of lockers- as it is at the customer's location, VAT is applicable under renting/leasing of goods.
Regards,
CMA Santosh G Kalburgi
14 July 2015
Santhosh sir,
Even though Lockers are placed in the customer's location there is no sales here.
Then How the sales Tax will apply.?
Pls guide. Is there any specific provisions.
Regards
Ganesh
Even though Lockers are placed in the customer's location there is no sales here.
Then How the sales Tax will apply.?
Pls guide. Is there any specific provisions.
Regards
Ganesh
24 July 2025
Great question! Here's a clear breakdown for your laundry business client:
---
### 1. **Laundry Charges on Factory Workwear**
* This is a **service** provided by washing/cleaning clothes.
* **Service Tax** is applicable on laundry services **if the aggregate turnover exceeds Rs. 10 lakh** (threshold limit).
* The relevant service category is **"Laundry, cleaning and dyeing services"** under Service Tax.
---
### 2. **Renting Lockers to Customers**
* Lockers are **goods**, and renting them is leasing of goods.
* Since lockers are placed at the **customer’s location**, this is considered **rental/lease of tangible goods**.
* **VAT applies on the rental of goods** in most states, including Karnataka.
* There is **no sale** here, so sales tax (on sale of goods) is not applicable.
* VAT on renting goods is governed under state VAT laws and charged separately.
---
### 3. **Why Service Tax on Laundry & VAT on Locker Rental?**
* Laundry is a service, so service tax applies.
* Locker rental is leasing goods, so VAT applies.
* Both can be billed on the **same invoice**, but tax treatment differs.
---
### 4. **Specific Legal/Notification Reference**
* **Service Tax on Laundry**: Included in the Finance Act, under “laundry services.”
* **VAT on Renting Goods**: As per state VAT laws, rental of tangible movable property is taxable under VAT.
---
### **Summary Table**
| Activity | Tax Applicable | Tax Category / Law |
| --------------------------- | --------------- | ------------------------------------------ |
| Laundry of factory workwear | Service Tax | Laundry Services (Central Service Tax Act) |
| Renting lockers | VAT (Sales Tax) | Rental/Lease of goods under State VAT |
---
### Additional Note:
* Some clients may wrongly classify laundry as job work and argue VAT applies. But laundry is a **service**, not job work on goods.
* Renting lockers is a lease of goods, not sale; hence VAT applies.
---
If you want, I can help draft a detailed explanation for your client or help with invoicing tax-wise. Would you like that?
---
### 1. **Laundry Charges on Factory Workwear**
* This is a **service** provided by washing/cleaning clothes.
* **Service Tax** is applicable on laundry services **if the aggregate turnover exceeds Rs. 10 lakh** (threshold limit).
* The relevant service category is **"Laundry, cleaning and dyeing services"** under Service Tax.
---
### 2. **Renting Lockers to Customers**
* Lockers are **goods**, and renting them is leasing of goods.
* Since lockers are placed at the **customer’s location**, this is considered **rental/lease of tangible goods**.
* **VAT applies on the rental of goods** in most states, including Karnataka.
* There is **no sale** here, so sales tax (on sale of goods) is not applicable.
* VAT on renting goods is governed under state VAT laws and charged separately.
---
### 3. **Why Service Tax on Laundry & VAT on Locker Rental?**
* Laundry is a service, so service tax applies.
* Locker rental is leasing goods, so VAT applies.
* Both can be billed on the **same invoice**, but tax treatment differs.
---
### 4. **Specific Legal/Notification Reference**
* **Service Tax on Laundry**: Included in the Finance Act, under “laundry services.”
* **VAT on Renting Goods**: As per state VAT laws, rental of tangible movable property is taxable under VAT.
---
### **Summary Table**
| Activity | Tax Applicable | Tax Category / Law |
| --------------------------- | --------------- | ------------------------------------------ |
| Laundry of factory workwear | Service Tax | Laundry Services (Central Service Tax Act) |
| Renting lockers | VAT (Sales Tax) | Rental/Lease of goods under State VAT |
---
### Additional Note:
* Some clients may wrongly classify laundry as job work and argue VAT applies. But laundry is a **service**, not job work on goods.
* Renting lockers is a lease of goods, not sale; hence VAT applies.
---
If you want, I can help draft a detailed explanation for your client or help with invoicing tax-wise. Would you like that?
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Notice from IT DEPTT IF FD AMOUNT EXCEEDS 10 LACS
- Applicablity on tds
- Unable to generate and save json file for updated return
- GST payable under RCM
- WRONGLY UPLOADED 10IF FOR COOPERATIVE SOCIETY
- PRODUCT AND SERVICE CATEGORY CODE
- Regarding TDS not deducted on rent
- Audit of F and O T/O
- Inverted Tax Structure & Unutilized ITC on Services
- Tax audit & Switching from Presumptive taxation
- Import purchase entry
- Rule 54(1A) for Distributing ITC
- EXCESS CREDIT REALTED GST REVERSAL
- Export invoice not reported
- CA Articleship Extension Matter
- GST OFFICER WRONG NOTICE
- "Please ensure that the Total of the Deductions u/s 54F match the same in Table D in Sch CG"
- Composition Dealer GST Annual Return Filing process
- Revision under Section 264 in The Income Tax Act, 1961
- TDS under section 195.
Trending Online Classes
-
LIVE Course on GSTR-9 & GSTR-9C (Technical | Practical | Concept - Based)
Sachin Jain03 November 2025
CAclubindia
