The prospects of the Congress in the upcoming lok Sabha elections suffered yet another major setback on Wednesday with Tamil Nadu Chief Minister J Jayalalithaa blasting Union Finance Minister P Chidambaram’s action of levying service tax on rice as “discriminatory and invidious move” against people in the south and east of India.
In a letter to Prime Minister Manmohan Singh, she asked for his immediate personal intervention for remitting and returning the service tax levied on rice since July 1, 2012 as it is certain that the introduction of service tax ion rice would lead to skyrocketing of its price.
In the strongly worded letter to the Prime Minister, excerpts of which were released to the media, Jayalalithaa described the Finance Minister’s move as invidious, discriminatory and completely unjust. The Chief Minister pointed out that the levy of service tax on rice would be an additional burden on the State Governments towards the expense incurred for the Public Distribution System and weaken the efforts ot the Governments to provide food security to all.
Jayalalithaa also highlighted the fact that the Vajpayee-led NDA Government had exempted rice from the purview of service tax since the then Government termed it as an agricultural produce. She blamed arch rival Chidambaram for whom rice was not an agricultural produce. “The Union Finance Minister in a DO letter No 354/114/2013- TRU dated 8th November, 2013, to the Minister of State (Independent charge) for Consumer Affairs, and Public Distribution System clarified that “Rice” and “ginned and baled cotton” do not fall within the definition of “agricultural produce”. Accordingly, from December, 2013, service tax is being collected on storage of rice, with effect from 1st July, 2012,” Jayalalithaa said in the letter.
The chief minister further pointed out that the decision of Chidsambaram smacked of discrimination against people in the States of South and East for whom rice is a staple diet. “This very strange stance taken by the Union Finance Minister that rice is not an agricultural product, while other cereals including wheat, are agricultural produce and hence exempt from levy of service tax on storage and other services is discriminatory, regressive and indefensible. It smacks of unfairness against people residing in certain regions of the country, especially in the South and the East where rice is the staple food grain consumed. It will raise the price of rice in the open market, particularly at a time when food inflation is already weighing down heavily on the common people,” said Jayalalithaa.
Coming down heavily on Chidambaram, Jayalalithaa said that the interpretation given by the Ministry of Finance defies logic and common sense. “From time immemorial, rice has been regarded as an “agricultural commodity,” she said. Tamil Nadu has already taken a clear stand in several fora that rice should be exempted from the levy of the Goods and Services Tax. Hence, using the GST argument to refuse to include rice within the definition of “agricultural produce” is thus not an appropriate stance, “ said the chief minister.
She also pointed out that the “thoughtless, insensitive and discriminatory” move of of Chidambaram is yet another instance of how distanced and divorced the UPA Government has become from the concerns of the common people “You will agree with me that this calls for your urgent personal intervention to clarify the position and unambiguously declare rice to be agricultural produce and hence not subject to the levy of service tax for all services related with it,” Jayalalithaa said in the letter.