Supreme Court rules wedding flower decorations are taxable services

The Supreme Court ruled April 16 that fresh flower decorations installed at wedding venues constitute taxable services rather than exempt goods sales when provided as part of a comprehensive wedding package.

The judgment in case 2025Du35626 established that even if a provider operates a separate business unit for floral installations, the supply is considered ancillary to the main wedding service if the contract and payment are handled collectively. The court reasoned that because the flower decoration was not supplied independently from the ceremony service and was integrated into the single agreement with the customer, it falls under the category of 'wedding hall business' services rather than 'retail sale of flowers and plants.'

The ruling stemmed from a dispute where a wedding hall operator had reported revenue from flower decorations as tax-exempt goods sales, arguing the flowers were supplied through a distinct business location. However, tax authorities reassessed the amounts as taxable service income, leading to additional value-added tax and corporate tax assessments. The Supreme Court upheld the lower court's decision supporting the tax office, stating that the Value Added Tax Act provisions exempting certain goods do not apply when the supply is subsidiary to a primary service.

In its judgment, the court emphasized that determining whether a transaction involves goods or services requires examining the specific circumstances of each case, including industry practices and the nature of the supply relationship. It found that even if ownership of the flowers transfers from the provider to the customer, the supply remains ancillary to the primary wedding service if the contract and payment are handled collectively.