Service tax is a component of Government tax in India that goes into many services and adds to the cost at the consumer level. It also therefore is a component that affects inflation.

Recently, GOI reduced the Service Tax by 2% from 12% to 10%. With the surcharge component, the tax now gets reduced from 12.36% to 10.30%.

It appears however that some service providers continue to charge 12.36% as service tax and the consumers have no choice but to pay if they want the service to be continued. This is obviously a fraud on the public. If the excess amount collected is passed on tot he Government and the Government has not informed the service provider that he has been calculating the tax wrongly, the Government would also be a party to such a fraud.

One such case has been identified in the Internet services provided by  Tata Indicom the premier Internet Service Provider in the country which took over the erstwhile VSNL . The Company has  continued to charge a service tax of 12.36% for its ISP renewal services.  See tariff chart as of April 2, 2009.

It is not clear if the company is also remitting the higher tax to the Government or appropriating it itself.

I hereby request the  Company as well as the IT department of the Government of India to clarify how this mistake has been allowed to continue and how this will be rectified.

Tata Indicom also has another anti-consumer flaw in their system of renewal of their services. The Company  has a strange policy where by if a customer renews the package before the account is due, the renewal is effected from the new date of renewal and not the earlier date of renewal. This means that customers who renew in advance would lose since they lose the overlapping time.

Hope Tata Indicom corrects this system also.

The IT departemnt should also clarify to the public, how it has dealt with the excess tax collection it might have received from Tata Indicom as well as similar other service providers who have been negligent in not taking the reduction in tax in their tariff computation.