DRY CLEANING

Date of introduction : 16.08.2002 vide Notification No,8/2002 dated 01.08.2002

Definition :

“Dry Cleaning” includes dry cleaning of apparels, garments or other textile, fur or leather articles; (Section 65 (31) of Finance Act, 1944 as amended)

“Dry Cleaner” means any commercial concern providing service in relation to dry cleaning. ( Section 65 (32) of Finance Act, 1944 as amended)

Taxable event & Scope of service:

Taxable service means any service provided to a customer, by a dry cleaner in relation to dry cleaning; and the term “service provider” shall be constructed accordingly.

( Section 65 (32) of Finance Act, 1944 as amended)

As per clause (31), “dry cleaning” includes dry cleaning of apparels, garments or leather articles. As per clause (32) “dry cleaner” means any commercial concern providing service in relation to dry cleaning. The taxable service, as per clause (90) (zt) is any service provided to a customer, by a dry cleaner in relation to dry cleaning.

Dry cleaner normally performs following process as on cloths during the process of dry cleaning:

i) Tagging and inspection-Dry cleaner inspects the cloths and tags them with an identification lable.

ii) Pre-treatment a stain remover is applied to remove the stains. Use of stain remover depends on the nature of stains such as stains or grease, oil, ink, colours etc. Fabrics/cloth is then rinsed and dried.

iii) Dry cleaning a dry cleaning machine is a motor driven washer/extractor/dryer and it holds clothes in a rotating, perforated stainless steel basket. Cloths are washed with a solvent. There may be various types of solvents used for dry cleaning such as perchloethlene (perc), carbon, tetrachloride, trichloethlene and petrol etc. As the clothes rotate in the perforated basket, there is a constant flow of clean solvent from the pump and filter system. After cleaning, the cloths are drained to expel the solvent and ten goes into a dry cycle by circulating warm air.

iv) Post spotting- If there is any spot/stain left after the dry cleaning, it is removed using water or any other appropriate chemical.

(Ministry’s F.No.B11/1/2002-TRU, dated 01.08.2002)

Value of taxable service:

Value of taxable services shall be the gross amount charged by the service provider for such service rendered by him.

Exemption and Exclusion:

Wet cleaning is process of cleaning garments in water and water and water soluble detergent.  It is clarified that service tax is leviable on dry cleaning. Accordingly service tax is not leviable on wet cleanings washing provided the dry cleaner clearly mentions it in the bill. If details are not mentioned in the bill, it would normally be understood that cloths have been dry cleaned and in such situation service tax is liable to be paid.

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