Is Service Tax applicable for school uniforms

[Guest]

Respected Sir,

We are supplying uniforms and stationeries to kids as we have tie-up with a school.

Do we need charge parents Service tax and VAT but we are already buying items by paying service tax and VAT.

Request your help on he same.

[Ganeshan Kalyani]

In my view VAT will apply. Service tax will not apply.

[KASTURI SETHI]

Uniform is stitched out of cloth or fabric. There is a difference between cloth, fabric and textile.As per Board's Circular No.334/8/2016/TRU dated 29.2.16 (para No.3.1.2 (i) ) tailoring does not amount to manufacture. Uniform is stitched out of cloth/fabric on job work basis as per specifications of customer. There is not an iota of doubt about this. So no exemption is available from Service Tax under Notification No.25/12-ST dated 20.6.12 as amended (effective from 1.7.12) under serial no.30(a). Since there is a difference between cloth/fabric and textile the term 'textile processing' does not include stitching.'Textile processing' is entirely different from cloth/fabric stitching.

Now it is worthwhile to discuss Section 66 D(f) of the Finance Act which is as under :-

[(f) "services by way of carrying out any process amounting to manufacture or production of goods excluding alcoholic liquor for human consumption;]"

Hence Service Tax is applicable from both angles.

From the date of enactment of Bill, 2017, vide Notification No.7/17-ST dated 2.2.17, the contents of Section 66 D (f) would be shifted from Negative List to Exempted List of services under Serial No.30 of Notification No.25/12-ST as amended.

Discussed both aspects for clarity.

[DR.MARIAPPAN GOVINDARAJAN]

Sethi Sir, still clarification is required for your views.

[KASTURI SETHI]

Sir,. The subject party is doing job work for a school in the form of supplying uniform etc.They stitch shirts/pants out of cloth purchased. I treat it job work as they recover the cost of cloth etc. Job work is exempted from ST only when it amount to manufacture. It it does not amount to manufacture, it attracts ST. Stitching/tailoring does not amount to manufacture as per Board's circular mentioned.By shifting the said entry from Negative List to Exempted List of services means either CE duty or ST must be added to .Govt.' Kitty.

[Nash Industries I Pvt Ltd]

The supplier of the uniform and stationeries are bought on payment of service tax and VAT from his vendors. He then supplies the readymade uniform and stationeries to the school.

Hence, only VAT is applicable.

Regards

S.Ramaswamy

[KASTURI SETHI]

The element of service is inherent.Service has been performed.

[KASTURI SETHI]

Dear Querist and Sh.S. Ramaswamy, Sir,

We cannot use the word ready-made here. Fabric has been stitched/tailored as per specifications of the customer(student). De facto, querist's Co. has worked for and on behalf of school authorities

[Nash Industries I Pvt Ltd]

Dear Sir,

The schools tie up with suppliers for the supply of uniforms and stationeries. The suppliers generally sell the uniforms (made to stock) rather than made to order (tailor made).

Therefore, is the presumption and the views/opinion.

Your views of service element is also acceptable where it is made to order.

Regards

S.Ramaswamy

[KASTURI SETHI]

Yes Sir.

Thanks & Regards.

K.L.SETHI

[Guest]

Thank you all for abundant views!

I am getting readymade uniform and books from my vendors and supplying to schools.. In this scenario only VAT is applicable or service tax also applicable.?

[KASTURI SETHI]

To purchase anything and sell is trading. No service is involved. You are earning profit and not commission. There is a difference between profit and commission. Service Tax is on commission and not on profit. If you consider that you are getting commission, then ST is applicable. Commission agent falls under the category of erstwhile BAS and now under the category of other than negative list. Now you are to decide whether you are getting commission or earning profit.

[KASTURI SETHI]

Trading is exempt.

[Ganeshan Kalyani]

Yes trading is exempted from service tax.

[Guest]

Thank you all for valuable inputs.

[Imtionen Mar]

Hello sir,

How do we bill schools(any VAT/Service Tax to be included?) when we procure ready-made uniforms from factories with CST inclusive in the factory's invoice?

AI Summary

Service tax on tailoring: may apply where activity constitutes a service; trading in readymade uniforms attracts VAT only. VAT applies to resale of ready made school uniforms and stationery because resale is trading and exempt from Service Tax. Stitching or tailoring to customer specifications constitutes job work/service rather than manufacture and can attract Service Tax unless specifically exempted. Whether Service Tax applies depends on factual characterisation: trading for profit (VAT only) versus acting as a commission agent (potential Service Tax liability), with recent reclassification of the service entry affecting statutory treatment.