Service tax on rice unfair, Jayalalithaa tells PM

Terming as unfair the central government's move to levy service tax on the storage of rice, Tamil Nadu Chief Minister J. Jayalalithaa urged Prime Minister Manmohan Singh to declare rice an agricultural produce and refund the already collected tax.

In a letter to the prime minister Feb 10, released here Wednesday, Jayalalithaa said: "In a thoughtless, insensitive and discriminatory manner, the finance ministry has proceeded to levy service tax on the storage of rice alone amongst all food grains."

The rice is the staple crop in south and east India.

"It is yet another instance of how distanced and divorced the UPA (United Progressive Alliance) government has become from the concerns of the common people," she added.

Jayalalithaa urged Singh to "unambiguously declare rice to be agricultural produce and hence not subject to the levy of service tax for all services related with it".

She said the service tax already collected with effect from July 1, 2012, should also be remitted and returned to assessees.

Originally rice was exempt from service tax as it was classified as agri-produce.

But later the finance ministry said only paddy is agri-produce, whereas if it is processed/dehusked, the resultant product is not.

On Feb 7, DMK president M.Karunanidhi also voiced his opposition on the issue.