Service tax applicability on gift packing

[sunil jain]

In case of retail store, gift packing is also done for which packing chages are also recovered. Will this amont to taxable service under category 'Packing servives[vide sec65(76b)]'. vat is paid on 80% of charges as per vat law. If s.tax is to be levied, whether on full amt charged or net of cost of packing material(material cost not disclosed in invoice but vat is pd on 80% value))

AI Summary

Service Tax Applicability Questioned on Gift Packing Services with 80% VAT Coverage; 20% May Be Service Charges A query was raised regarding the applicability of service tax on gift packing services provided by a retail store, where 80% of packing charges are subject to VAT. The respondent explained that packing goods for sale is typically incidental and not a separate service, thus generally exempt from service tax. However, since only 80% of the charges are taxed under VAT, the remaining 20% might be considered as service charges. The determination of service tax applicability on this 20% requires consideration of various factors, such as the nature of packing and related services, and the agreements between VAT and service tax authorities.