The Hindu Business Line : How far do you find software piracy hard to digest?

Story so far: Once the transport strike was off, we hasten to clear the inventory. A hold-up happens at the check-post and I go to sort out the problem. Papers are in order, I find, but the officials expect more speed-money. After getting my consignment moving, I ponder if it makes sense to impose service tax on truckers when itchy palms on our highways already slap us all with covert taxes.

Episode 92

In response to last week's topic, I am sure all the friends of Chattar Bhai would have replied if only they had Net access on National Highways. But there are other enthusiastic responses. "Hi Swati, your perception is realistic. We need to take these amounts into consideration when calculating inflation," writes Rajesh. In that case, inflation may leap beyond 8 per cent, I fear!

"Swati, you have touched upon the most powerful issue in India, that is, corruption among government officials," writes Kamal Anil Kapadia, a CA from Mumbai. "I always believe that roadside sellers are far, far better than shops that go through all the rules and regulations, such as the Shops and Establishment Act, service tax, professional tax, the Minimum Wages Act, the ESI Rules, sales tax, income-tax, excise and so on. "In spite of all taxes being paid, one has to pay some amount to get things cleared. So why not pay them directly?" True, it can be frustrating.

"We need to have an extra buck ready every time. On top of rising inflation and oil prices, there is harassment by local police; also, there are bribes asked for at every turn. The Government should think of improving the efficiency of the departments and not impose newer taxes." Hope they listen.

"Dear Swati, greasing the palms is not confined only to check-post wallahs," writes Anil Kumar Pillai from Kannur. "It is widely prevalent in government departments, especially if one demands preferential treatment. But such miscellaneous/contingent expense need not be a valid reason for not levying service tax. How many times did we grease the palms of various officials to get our company's work done? Does it mean that we should not be paying income-tax? I think the problem of service taxes on truckers should be viewed from a different angle." What's that?

"Covert tax goes into the pockets of officials but service tax goes into the coffers of government, hopefully for the benefit of the public. Even if the government levies tax on booking agents, they are smart enough to pass it on to customers. Thus, levying service tax on truckers would have a cascading effect on all items such as foodgrains, vegetables, cement and so on, where transportation is a major cost component. Inflation would rise further. So, spare the truckers and levy tax on other services which evade taxes."

That should make truckers happy.

"Dear Swati, I am really surprised that you still do not understand the `something special'," writes Thanga Velu chidingly. "In India nothing moves unless something is paid, which is popularly known as mamool. You would have heard that whenever there's a strike in Tamil Nadu people say that their mamool life (day-to-day life) is affected. For government staff, however, it is mamool life (bribe-taking) that is affected. When you send goods from Chennai to Assam, it has to pass through a minimum of 15 sales tax or RTO check-posts; you will have to pay a minimum of Rs 100 at each junction to get through, even though your papers are in order.

"Nowadays wayside dadas in remote highways also collect their fees. If you do not pay, your truck will disappear or your goods will be damaged. You may ask why not we have highway patrol? It will be another government agency which will soon get corrupted. It is better to pay the standard unofficial toll rather than to protest, in the interest of smooth movement of goods. They say the going rate for getting posted in check-post is Rs 1-2 lakh. If you say you are honest, the officials may laugh at you and ridicule by asking, "Are you the grandson or daughter of the Father of the Nation?" We do have some good officials, but they are a minority in the present setup. They are posted in insignificant departments, where they do not have the powers to do anything worthwhile for the citizens. Every trucker knows that he is not bound to pay mamool, but if he refuses, the truck will be detained for days together causing heavy loss. Hence, everybody is willing to grease the palms rather than protest, and give vent to their anger by organising nation-wide strikes whenever they get an opportunity.

"The truckers are smart too; they collect the same from the consumers anyhow. Levy of service tax is not to penalise truckers but to regulate them. Half the goods produced in our country pass through check-posts without payment of excise or sales tax. Seventy per cent of truckers do not keep proper records of what they book and what they send. Your company may be a minority, which believes still in "honesty is the best policy." Booking agencies fear that they will be taken to task for false report, since they will have to keep record of all receipts issued to consignees and keep books in order, else they will be penalised. Another factor is, they will have to show their real income. Now you know the reason for the truckers' strike, and also why it is important to levy service tax on goods booking agencies. It is after all our economy and, in turn, our people who are going to benefit in the long run." A strong case for the levy.

"Dear Swati, not only you but all Indians should get disgusted by such acts," says a mail from B. Subramanian. "What if all the salaried start a strike, stating they won't pay income-tax on their income? If truckers stopped their lorries complaining of corruption it would have made sense and all would support them wholeheartedly. At this juncture, I would like to share my personal experience with TVS Southern Roadways, where I was previously working. There, all goods and parcels are booked with the necessary backup documents; if there are any goods without such papers, they are avoided. Because of this, we lost considerable business that our competitors took because they believed in bribing check-post officials. When our lorries are checked at the check-post, the officials check each and every bill, load capacity, tyre conditions, driver licence, his uniform (although it is not their job) and delay the vehicle by 3-5 hours. In case of discrepancies, he would unload the goods there itself and ask the booking party concerned to come and pay the penalty and clear the goods, while we earn the party's wrath.

"In this competitive world, no one wants to be late and they are ready to pay the `extra' cost for speedy actions. Even when all the documents are in order, the check-post officials or highway authorities will levy fine one way or the other if the truck driver does not give the mamool. They will explore new reasons for the fine, such as load three inches higher than the nominated height, speed above normal limits, driver not wearing uniform, driver not holding the licence badge, wipers not working, and so on. Once you start proving your innocence (without negotiating the bribe amount), you are an endangered species.

"To avoid this, all truck owners should take a strong decision that they will not bribe for any reason and they shall be fined instead for any violations. Or they can complain about the same to the corruption squad who are there in all cities so that this does not continue and the officials concerned caught red-handed. News channels should capture this on video, as in the recent case of wheat stolen from PDS godowns. This will reduce bribe rates and all should get the feeling that accepting or giving bribe is a sinful act.

"When I asked a friendly officer about this he said that truck drivers bribe them to take excess load or a load without tax and so on. Hence, this is a question of which came first, chicken or the egg. Until the thief himself wants to become good, no one can stop stealing." Quite philosophical, that is.

********

At work, I have been working with my colleagues in the marketing department in the new sales promos. In that connection, I had occasion to visit a popular design company. Kadir, the chief there, took me round the office where different teams were busily working on projects. On one side, there was an animation work for a Hollywood movie. "We're doing a 6-second bit," said Kadir. "What's the value?" I asked. And he whispered a big sum in my ears. In another corner, a team was designing a logo. "That's for a new Spanish brand which will be launched in metros soon!" Everywhere I could see the most popular software screens. Only that morning I had read that 90 per cent of Adobe software in use are pirated copies. India is not far behind China that tops the list of countries having the highest rate of software piracy. I asked, "Kadir, all these are legal copies, right?" He looked at me strangely, and asked, "Hey, you must be joking!"

Well, somebody brought in some cola for us to drink, then Kadir got busy with calls on his mobile, and soon I was heading back to office. However, a thought that kept nagging me was whether piracy was acceptable in companies that earned neat sums using the software in their jobs. Send in your thoughts by Friday.

Swati_CA@hotmail.com

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