INTERIOR DECORATOR’S SERVICES

[Dr. Sanjiv Agarwal]

INTERIOR DECORATOR'S SERVICES

 

Dr.Sanjiv Agarwal

Service tax has been imposed on interior decorator services with effect from 16th October, 1998 vide Notification No. 53/98-ST, dated 7th October, 1998. The gross amount charged by such interior decorator from the client for taxable services shall be chargeable to service tax.

Meaning of Interior Decorator

Section 65(59) defines 'interior decorator'  to mean any person engaged whether directly or indirectly in the business of providing by way of advise, 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.

Following requirements must be satisfied to be called an interior decorator:

   (i)  he should be any person

  (ii)  such person should be engaged in providing specific services

(iii)  services could be rendered in any manner, directly and indirectly

(iv)  landscape designers are included.

The rendering of specific services by interior decorator would include :

   (i)  advice

  (ii)  consultancy

(iii)  technical advice or assistance

(iv)  services in any other manner.

This implies that the planning, organisation and implementation, all would be covered. Such services should relate to interior decoration and may include :

   (i)  planning

  (ii)  designing or redesigning

(iii)  beautification of space-man-made or otherwise

(iv)  carrying on the activity or service in any other form.

Civil contractors who execute work as per the instructions of interior decorator and do not provide any service like advice, consulting or technical assistance are excluded.

Landscape induces land development, beautification of land or a portion of land which can be viewed.

Taxable Service

Section 65(105)(q) defines 'taxable service' to mean  any service provided or to be provided to any person, by an interior decorator in relation to planning, design, or beautification of spaces, whether man made or otherwise, in any manner.

It would include all type of services relating to interior decoration and landscape designing. Such services may relate to man-made items or otherwise and cover advice, consultancy, technical assistance etc. relating to planning, designing and beautification of spaces. Such beautification may have various meanings and must be understood in real terms. Since Vaastu / Feng Shui consultants offer services by way of advice relating to planning, and designing of spaces, they are liable to pay service tax under this category.

Replacement of 'client with any person' (w.e.f. 16.5.2008)

Finance Act 2008 has substituted the words 'to any person' for the word 'to a client' (w.e.f. 16.5.2008) as the service tax is levied on service and status of recipient of taxable service should not determine the tax treatment of a given service.

Space management services include designing the layout to have optimum use of space and would be taxable.

The essential requirements for taxability of service are —

  (i)   Service must be provided (includes services to be provided) by a person;

(ii)   Service must relate to planning, design or beautification of spaces, whether man-made or otherwise;

(iii)   Service can be any advice, consultancy, technical assistance or any other manner;

(iv)   Landscape design services would also be taxable;

(v)   Service must be provided to a client;

(vi)   Service may be provided in any manner.

In Spandrel v. CCE, (2010 -TMI - 78465 - CESTAT, BANGALORE), where assessee was registered under interior decorator's service, it was held that activities of pest control, masonary work, wall preparation etc. was akin to the civil work as commercial or industrial construction services and not interior decoration service.

In Garden Markers v. CCE, Kochi 2008 -TMI - 34106 - (CESTAT, BANGALORE), it was held that prima facie, gardening activities and horticulture like planting of trees, garden plants, grass lawn etc are not covered in interior decorator's services.

In Cozy Interiors Pvt Ltd v. CST 2008 -TMI - 30496 - (CESTAT MUMBAI), services rendered in relation to execution of civil work, false ceiling work, carpentry work, painting and plumbing work, electrical work and other works as per plans and design were prima facie held to be interior decorator services (Also see, Space Decorators v CCE (2007)10 STT 120 (CESTAT, Mumbai)

Value of Taxable Service

Interior decorator's nature of job is such that they incur expenses connected to the job such as expenses on travelling, hotel, supplies etc. These expenses are normally charged to clients. These expenses are to be included in assessing service tax as they are part of gross amount charged to the client.

Sometimes, interior decorators give advise, technical assistance as well as execute the work of construction of building, furniture etc. and charge a consolidated amount from the clients. The value of taxable services in such cases will include the value of charges (gross amount) for construction work also. Service tax is not leviable on the supply or sale of material, items of furniture etc. but only on the value of the services rendered (Refer Notification No. 12/2003-ST, dated
20-6-2003).

Interior decorators may also engage services of other professionals, e.g. architect or engineer etc. The decorator will have to pay the service tax on such services unless the other professional are hired or paid directly by the client. If the professionals (architects, engineers etc) bill directly to the client, service tax would be attracted.

Person Liable

Every interior decorator who raises a bill for service rendered to a client by him/her shall be liable to pay service tax and be treated as an assessee for service tax purposes.

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