Service tax applicability on gift packing

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....ervice tax applicability on gift packing<br> Query (Issue) Started By: - sunil jain Dated:- 5-2-2010 Last Reply Date:- 6-2-2010 Service Tax<br>Got 1 Reply<br>Service Tax<br>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....

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..... 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)) Reply By DEV KUMAR KOTHARI: The Reply: Packing of goods in shop or store for selling and delivering goods is incidental to sale of goods and not as a separate service provided. Therefore, there should not generally be any service tax. Howev....

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....er, as only 80% of charges are considered as sale for VAT, question arises as to whether legally under provisions of VAT only 80% of charges are considered as sale and balance 20% as service charges for packing. Why 20% has been left out from levy of VAT? Whether it is as per any understanding arrived amongs VAT department, Service tAx department and trade association etc. In this situation 20% c....

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....an be considered as charges of service. Only on consideration of all related aspects, of nature of packing, labelling, mailing ,the relationship between aprties, total service charges received for packing on 20% basis, other services rendered,it can be decided whetehr service tax is chargeable or not on balance 20% of charges.<br> Discussion Forum - Knowledge Sharing ....