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St on guest laundry service in hotels - urgent

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Nagappa B Nesur

PROPRIETOR

37 Points Posted on 04 January 2012

Dear Sir

In some hotels, the Laundry Charges are charged to guest along with the service tax at 10.3% under Dry Cleaning service. Whether this is chargeable even though the hotel is not carrying out any Dry cleaning activity in its premises and is getting it done by outside party.

Is the applicability of ST on the above service by hotels change if the service value is shown separately as "Dry Cleaning" and "Wet Cleaning".

Regards

Nagappa

Replies (1)

CA MAULIK

C.A

1044 Points Posted on 04 January 2012

In most of the Hotels, they are charging Service Tax on Guest Laundry Service bills to their guest staying in hotel.

Laundry Cleaning may be by ‘Dry Cleaning’ or ‘Wet Cleaning’ method. If it is by Dry Cleaning, then only it is taxable under Dry Cleaning Service. The Wet Cleaning is not a specified activity under Sec.65(105)(zt). Further, the instruction/circular F.No.B.11/1/2002-TRU dated 01-08-2002 clarifies that the Wet Cleaning is not taxable to service tax and also specify the activities involved in dry cleaning.