Jaya flays FM for levying service tax on storage of rice

She today demanded Prime Minister's intervention to unambiguously declare rice as an agricultural produce

Tamil Nadu chief minister J Jayalalithaa has sought Prime Minister’s intervention in unambiguously declaring rice as an agricultural produce and hence it should not come under service tax. In a letter dated February 10, 2014, to Prime Minister Manmohan Singh, she came down heavily on the finance ministry and particularly Finance Minister P Chidambaram, for levying service tax on storage of rice “in a thoughtless, insensitive and discriminatory manner.”

“This will be an additional burden on the state government towards the expense incurred for the public distribution system and weaken our efforts to provide food security to all,” she stated.

While service tax was levied on storage of goods, rice had been exempted since it was defined as agricultural produce through an order in 2002, and reiterated during various years after that. However, the definition of ‘agricultural produce’ was changed,and under new definition in Section 65B (5) of the Finance Act,2012, the more inclusive definition which specifically mentioned rice was removed, the letter stated.

She alleged the finance minister, in a letter on Nov 8, 2013, to the Minister of State (Independent charge) for Consumer Affairs, and Public Distribution System clarified that ‘rice’ and ‘ginned and baled cotton’ did not fall within the definition of  ‘agricultural produce’ under Section 65B(5).

“The interpretation given by the Ministry of Finance defies logic and common sense. From time immemorial, rice has been regarded as an agri commodity,” she added.

Unhappy with Rail Budget

Jayalalithaa said the Railway Budget 2014-2015 was extremely disappointing as there was hardly any capacity addition in the passenger and freight segments in the southern region. Most of the freshbenefits were confined to the north, which highlighted the UPA’s step-motherly treatment to the south.