Financial Daily from THE HINDU group of publications
Friday, Aug 27, 2004
Columns - Say Cheek
Waving `go' at the check-post!
IT'S almost a week since the transport strike started. We see fewer lorries on roads, as they are busy providing place for people to sleep underneath or for idle labourers to play cards in the absence of loads. To add to everybody's difficulty, there are the `appeal' ads from the government, a TV address by the Minister, counter-statements from the striking associations and so forth. And questions pour in fours and sixes as in ODIs (because you can find trucks with as many wheels), so here are some answers for the clueless.
What was said on July 8?
Oh, that was long ago, when the Finance Minister presented the Budget. In para 149 of his speech, he added to the tax net more services, and there, `services provided by transport booking agents' was one among the many new ones in the list, but most people watching the live telecast had missed it. As if to wake them up to reality, PC hastened to add, "I may clarify that there is no intention to levy service tax on truck owners or truck operators." We may say that trouble started there.
Did the Bill add to the woes?
The Finance Bill that's been passed on Thursday in great hurry inserted a sleepy-looking sub-clause `zzp' bringing in "a goods transport agency, in relation to transport of goods by road in a goods carriage." Among definitions was a new (50b) of `goods transport agency,' explained as "any commercial concern which provides service in relation to transport of goods by road and issues consignment note, by whatever name called."
I think the ad says it all!
True, the appeal from the Ministry of Finance asking truckers to call off the strike repeated the lines from the Budget and the Bill and paraphrased thus: "A careful reading of the definitions makes it clear that the incidence of the tax does not fall upon the truck owners or truck operators." But the problem is that there are many small operators doubling as agents, claims the striking trucker body.
Now who is changing lanes?
Government says that big agents, to suit their own purposes, have wrongly advised the truck operators and owners to strike work. Industry representatives say that the Revenue Secretary is changing her stand in every meeting.
They say the FM is waving `go' at the check-post. True?
Very much, he is telling all those drivers at the wheel: "No tax has been imposed on you and no tax will be imposed on you." When they still blink, he adds: "You will not be required to register. And you are not required to register." If they smile a bit, PC goes one step further and announces: "You will not be required to collect any service tax. You will not be required to pay any service tax." But parking brakes are still on.
Any lessons from history?
There are. Services provided by goods transport operators, outdoor caterers, pandal and shamiana contractors were brought under the tax net in the Budget 1997-98, but abolished in June 1998, in the typical `rollback' style of Yashy. Within months, many new services were roped in, such as those of architects, interior decorators, management consultants, practising CAs, company secretaries, cost accountants, real estate agents, private security agencies and so on, apart from (the now-exempted) mechanised slaughter houses. In the same way, if PC yields to truckers' demands, we may expect some new goats to be lined up at the service abattoir.
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