No specific definition has been provided in respect of present services, however, the following clarifies the ambit of the present service:
Interior Decorator Services pertains to services in relation to planning, design or beautification of spaces whether man-made or otherwise. CBEC vide Circular F. No B- 11/3/98-TRU, dated 7.10.1998has clarified that services only in nature of advise, design or beautification are chargeable to service tax under this head and not the actual execution of work.
Activities such as plumbing, civil and carpentry work done are not covered under the taxable head of Interior Decorator services as held by the Tribunal in the case of Space Decorator V Commissioner of Central Excise[ 2007 (008) STR 0362 (Mumbai CESTAT)].
Such codes are no longer statutory but used for statistical purpose for the purpose of registration and for payment of tax as specified vide Circular No.165/16/2012 –ST dated 20.11.2012:
Tax Collection of Service
Interest and penalties on such service
Provision relating to Negative List
Interior Decorator services are not included in the Negative List as specified under Section 66D of the Finance Act, 1994.
Provisions relating to exemptions
Small Service Provider
Vide Notification No 33/2012-ST, dated 20.06.2012 – Exemption to Small service providers having taxable turnover of less than 10 Lakhs and providing services other than by way of under a brand name.
Import of Technology
Vide Notification No. 14/ 2012-ST, dated March 17, 2012 – Exemption in respect of Taxable service involving import of technology, from so much of service tax, as is equivalent to the extent of amount of R&D Cess payable on the said transfer of technology under the provisions of section 3 of the Research and Development Cess Act, 1986.
To Foreign Diplomatic missions and their personnel
Vide Notification No 27/2012-ST, dated 20.06.2012 – Exemption for all the taxable services provided by any person, for the official use of a foreign diplomatic mission or consular post in India, or for personal use or for the use of the family members of diplomatic agents or career consular officers posted therein.
Services by TBI or STEP
Vide Notification No 32/2012-ST, dated 20.06.2012 – All taxable services provided by TBI or STEP have been exempted
Services provided to SEZ
Vide Notification No 40/2012-ST, dated 20.06.2012, all taxable services received by a Unit located in a Special Economic Zone (SEZ) or Developer of SEZ for the authorized operations, has been exempted from the levy of whole of the service tax.
No Specific Exemption had been granted by the government in case of Interior Decorator services.
Provisions relating to Valuation and Abatement
Section 67 read along with Service Tax (Determination of Value) Rules, 2006 provides the manner of determining the value of taxable services on which services tax should be levied.
In respect of Interior Decorator services, no specific provision for determination of taxable value has been provided. However it has been clarified that the value of taxable services is the total amount of consideration consisting of all components of the taxable service and it is immaterial that the details of individual components of the total consideration are indicated separately in the invoice. Thus, the value of taxable Interior Decorator services is to be determined in terms of provision of Section 67 read with the prescribed Rules.
No abatement has been granted to any person liable to pay service tax under the Section.
Provisions relating to Cenvat Credit
The Credit is available to the service provider in respect of the duty or tax paid on Capital goods, inputs and input services.
Provisions relating to point of taxation
As per Rule 3 of Point of Taxation Rules, 2011, the point of taxation shall be-
Time when the invoice for the service provided or to be provided is issued. As per Rule 4A of Service Tax Rules, invoice shall be issued within 30 days from the date of completion of service. In case invoice is not issued within 30 days from the completion of service, the point of taxation shall be the date of completion of service.
In case where the person providing the service receives payment before the time specified above, the date of receipt of payment shall be the point of taxation.
If the period of providing the service is more than 3 months, it will be considered as continuous service as defined in rule 2(c) of Point of Taxation Rules, 2011. Accordingly, proviso to rule 3 of Point of Taxation Rules will apply for determining date of the completion of service.
Provisions relating to Place of Provision of Service Rules, 2012
The Place of Provision of Service Rules, 2012 contains different rules for different nature of services. Since Interior decorator services are required to be performed in relation to immovable property, Rule 5 of Place of Provision Rules, 2012 is relevant for this category of service is as follows:
Rule 5: The place of provision of services provided directly in relation to an immovable property, including services provided in this regard by experts and estate agents, provision of hotel accommodation by a hotel, inn, guest house, club or campsite, by whatever, name called, grant of rights to use immovable property, services for carrying out or co-ordination of construction work, including architects or interior decorators, shall be the place where the immovable property is located or intended to be located.
Thus if the property is located within taxable territory, services shall be taxable, else not.
Provisions relating to reverse charge
Interior Decorator Complex services are not included under the mechanism of Reverse Charge. Hence, the person providing the service shall be the person liable to pay service tax.
Taxability as settled by precedents / Circulars / Trade notices
Whether falls within the scope of present service
When the sub-contract service falls under the different category of taxable service provider ie., architect.
services rendered by Art directors of films and others who render services of design etc. for setting up temporary structures/settings for shootings etc.
Extracts of Circular F. no. b11/3/98-TRU, dated 7-10-1998 Trade Notice No. 7/98-ST, dated 13-10-1998, Mumbai Commissionerate
Vaastu/Feng shui consultants
Advanced Technology Services V CCE, Kolkata 2006 (1) STR 184
Related Circulars and Notification
Extracts of Circular F. No. BII/3/98-TRU, dated 7-10-1998trade notice no. 7/98-ST, dated 13-10-1998, Mumbai Commissionerate
4.4 As per section 65(20) “interior decorator” means any person engaged, whether directly or indirectly, in the business of providing by way of advice, consultancy, technical assistance or in any other manner, services related to planning, design or beautification of spaces, whether man-made or otherwise and includes a landscape designer. The “taxable service” in the case of an interior decorator means any service provided to a client in relation to planning, design or beautification of spaces, whether man-made or otherwise, in any manner.
4.5 An issue has been raised as regards the basis on which determination of the service tax liability on ongoing projects (on the date of service tax coming into effect) is to be made. In this regard it is clarified that service tax is payable only in respect of services rendered on or after the date on which the service tax provisions come into force. Service tax is not required to be paid on payments received for services rendered prior to the service tax concerned being notified.
4.6 Further, in cases where an architect/interior decorator sub-contracts part/whole of his work to another architect/interior decorator, it is clarified that no service tax is required to be paid by the sub-contractor provided that the principal architect/interior decorator has paid the service tax on the services rendered by him to the client and provided the sub-contracting is in respect of the same service category. In other words work is sub-contracted by one architect to another architect. In such cases, if the principal architect pays the service tax on services rendered by him to his client, the sub-contracting architect is not required to pay the service tax. However, service tax would be required to be paid in a case where sub-contracting is to a different service category.
For example, where an architect sub-contracts his work to a consulting engineer, then service tax would be required to be paid by both the architect and the consulting engineer on the services rendered by them. Similarly, a market research agency would be required to pay service tax on services rendered by it to an advertising agency, even if the advertising agency is also liable to pay service tax on the amount billed to its client for advertising services (which inter alia, includes the amount paid by the advertising agency for such market research services to the market research agency).
4.7 It is also clarified that service tax is not leviable on supply of materials, items of furniture or decoration, per se, but on services, rendered in any manner, concerning planning, design or beautification of spaces. Also the services rendered by Art directors of films and others who render services of design etc. for setting up temporary structures/settings for shootings etc. do not attract the service tax levy as such interior decoration has no permanency and is only of a temporary nature.