The government, in a circular dated 1 August 2002, has clarified that sometimes fashion designers not only provide designing service but also make garments or intended articles as per the requirement and charge fees in a composite manner for designing as well as making of garments. The service tax levy covers only the fashion designing service. Making of garments is outside the purview of the levy. Therefore, service tax will be leviable only on designing charges, provided the fashion designer shows the designing charges and making charges separately in the bill. However, if consolidated charges are shown, then service tax will be on the entire amount.
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