VAT , Service Tax , SB Cess on Packing charges ?

[sanjeev talwar]

Food was ordered for home delivery from KFC , Dwarka , New Delhi . Packing charges were incl in the bill which was also taxed for VAT, Service tax & SB cess . Is it correct & justified as per govt tax rules ? Pls confirm .l

[CSSANJAY MALHOTRA]

Dear Mr. Sanjeev,

Packing cost is a part of the product cost which is chargeable to VAT, Excise, Service Tax & SB CESS. Vendor claims VAT credit on Inputs i.e. packing material which he has to offset against final tax liability of Finished product.

Levy of Service Tax on delivery of food itself is an contentious issues as of now as the sale of food is not chargeable to Service Tax and the issue is pending at various appellate authorities for final decision. As the same is not specified under Negative or Exemption List of Service Tax, i.e. why the Seller charges service tax to protect himself for any revenue loss.

[sanjeev talwar]

thnx for the input .

AI Summary

Packing charges taxable: VAT and cess apply while service tax on food delivery remains legally contentious. Packing cost forms part of the product price and is chargeable to VAT and SB cess, with vendors able to claim input tax credit on packing material to offset tax on the finished sale. Levy of Service Tax on food delivery is contentious and presently subject to appellate consideration; some sellers charge service tax on delivery to avoid revenue risk given the absence of an explicit negative or exemption listing.