Service tax on beauty parlor - exemption notification no. 12/2003 for goods supplied / used

[Shama Sarin]

If a Beauty Parlour purchases products(inputs consumed) in bulk & consumes it on to its customers during the course of providing the services in parts,can he opt to segregate his total bill into 1-consumption/sale of goods & pay VAT if required 2-Rendering of Services under notification 12/2003-ST dated 20th June 2003....Please note that he doesnot wish to claim the Cenvat Credit on inputs.

[Rama Krishana]

Yes, technically you are right. The cost of the goods sold in the course of provision of services is exempt from service tax under notification no. 12/2003. Payment of VAT on sale of goods in an additional evidence to prove its value apart from any other documentary evidence. But, the important question is that how to prove it as a sale? Whether the beauty parlor is showing the amount of sale on its invoice issued to customer?

AI Summary

Beauty Parlor Billing Split: Goods Sales Exempt from Service Tax Per Notification 12/2003, Needs Proper Documentation A beauty parlor owner inquired about the possibility of separating their billing into two parts: the sale of goods and the rendering of services, under exemption notification no. 12/2003. The owner does not wish to claim Cenvat Credit on inputs. A respondent confirmed that goods sold during service provision are exempt from service tax under this notification, and VAT payment on goods further supports this classification. However, the respondent emphasized the need for proper documentation to prove the sale, such as showing the sale amount on customer invoices.