Service Tax on Tailoring Activity

[Prakash Gupta]

Dear All,

I have following queries on tailoring activity :

1. In case where fabric is supplied and stitched by the tailor, whether this activity is manufacturing or service ? In whatever applicable case what would be the rate of the Tax ?

2. What would be the tax applicability in case case where fabric is supplied by the customer and stitched by the tailor?

Thanks,

Best,

Pankaj Singh

[KASTURI SETHI]

No Central Excise duty on tailoring as per Board's Circular No.334/8/2016-TRU dated 29.2.16 (Para no.3.1.2). The aspect of ST being examined.

[Ganeshan Kalyani]

Sir, Tailoring is a service. Thanks.

[KASTURI SETHI]

Just like dry-cleaning, Sir

[KASTURI SETHI]

This service is covered under the category, "Other Than Negative List".

[Ganeshan Kalyani]

Sir, w.e.f. 01.07.2012 all services are taxable unless covered by Mega Exemption Notification or Negative list or specifically covered by any Notification. Thanks.

[CSSANJAY MALHOTRA]

Rightly said Mr. Ganeshan ji.

Furthermore the same can be exempted if the assessee proves that the same is carried out as an Intermediate production process as Job work in relation to Textile Processing. (Sr. No. 30 of Notification No. 25/2012-ST dated 20.06.2012)

[Ganeshan Kalyani]

Sri Sanjay Sir Thanks.

[Prakash Gupta]

Dear All,

As per section 66D(f) (Negative list) of the finance act 1994, Services by way of carrying out any process amounting to manufacture or production of goods excluding alcoholic liquor for human consumption; is out of the ambit of the service tax. And since stitching of the cloths is manufacturing covered under chapter heading 6201 and also affirmed in case of the Commissioner of the central excise vs Diwan Sahebfashion Pvt Ltd 2012 (10) TMI 626 - DELHI HIGH COURT on 15.010.2012.

further as replied by Mr. Kasturi Sethi No central excise duty on tailoring as per the board TRU circular dated 29.02.2016 (Para 3.1.2).

So on the basis of the above should i conclude as stitching is out of the ambit of the service tax since it amount to manufacture and no excise duty will be leviable as it is specifically exempted by board circular.

Thanks,

Best,

Pankaj Singh

[KASTURI SETHI]

Sh.Prakash Gupta Ji,

Thanks for deep study. I really appreciate your art of expression/presentation.

[Ganeshan Kalyani]

Sir, the query in part two won't fit into your interpretation. Thanks.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

Re-examined. Example of second query is job-work like drying cleaning service manner. Job-work is not out of service tax net. It is under , "Other Than Negative List" Sh.Prakash Gupta/Pankaj Singh's first part is correct. Reply fits into first party.

Sh.Kalyani Ji, Thanks for penetration into reply as well asquery. To error is human.

[CSSANJAY MALHOTRA]

Dear Friends,

firstly as per circular, tailoring is exempted from duty only in case of retail establishments and not for all.

Furthermore, activity involved in stitching needs to be seen whether it resulted in new product or alteration On existing product. If finished product comes into existence during tailoring job, it amounts to manufacture or else not. It may qualify as intermediate product and considered as service, thus exempted under Sr No 30 of notf no 25/2012-ST.

Hence Querist should clearly state the product resulted from tailoring activity.

[KASTURI SETHI]

Sh.CS Sanjay Malhotra Ji,

Sir, Thanks a lot for throwing more light on the issue. No end of road to learning.

[dinesh ahuja]

Dear All,

I have following queries on tailoring activity :

1. In case where fabric is supplied for stitched by the customer for tailoring to the shop keeper , what would be the rate of the GST ?

Thanks,

Best,

[KASTURI SETHI]

Dear Querist,

You will get final and confirmed solution by tomorrow evening in this forum. Studying the issue. I hope to solve your problem.

[KASTURI SETHI]

See reply to Issue ID No.11267 posted by Sh.C.S.Sanjay Malhotra, an authority on GST and all indirect taxes.

[KASTURI SETHI]

Prior to 1.7.17 stitching of clothes was out of Service Tax net as per Board's Circular. Extract of Board's Circular is appended below:-

F. No. B11/1/2002-TRU, dated 1-8-2002

4. A point has been raised as to whether tailors and jewellers will be covered under the service tax. Taxable service in this case is designing of goods intended to be worn by human being. A tailor is involved only in stitching of clothes. As such no designing activity is involved. Hence tailor will not be covered under the tax net. Similarly jeweller essentially makes jewellery and sells it. Therefore, no designing is involved. However a jeweller may avail services of a designer to design jewellery. Service provided by designer to jeweller would be covered under the tax net in the category of fashion designing.

Now this activity is not covered under exemption list of services, 5%, 12 %, 28% . Unless and until clarification is received from the Board, in my view it is covered under 18% slab (Service not elsewhere specified). Other experts may throw light on the issue. We may hope such clarificatory circular.

 

[KASTURI SETHI]

Dear Querist,

With reference to your telephonic talk yesterday, you said that you were engaged in stitching bed sheet covers, pillow covers, curtains etc on job-work basis. GST @5% is leviable on goods below ₹ 1000/- and GST@12% is leviable on goods above ₹ 1000/-. If goods are branded, no threshold exemption is available. Your principal can pay GST depending upon the nature of agreement between you (job-worker) and principal ( jobbee).

I like to post my reply on this forum instead of on phone.

AI Summary

Debate on Service Tax Applicability for Tailoring: Manufacturing or Service? GST Rates Discussed per Goods Nature. A discussion on a forum revolves around the applicability of service tax on tailoring activities. Participants debate whether tailoring constitutes a manufacturing or service activity, particularly when fabric is supplied by customers. It is noted that tailoring is generally considered a service and is not subject to central excise duty, as per a Board's Circular. However, if tailoring results in a new product, it may be considered manufacturing and exempt from service tax under specific conditions. The conversation also touches on the applicability of GST, suggesting different rates based on the nature of the goods and agreements between parties involved.