chartered accountant
792 Points
Joined January 2013
When Hitachi manufactures Air Conditioners, they exploit a lot of natural resources - including water, air, noise pollution. This creates problems for the society. As a compensation for this, they pay tax. However, they sell those ACs to a restaurant, and recover the tax from it. That restaurant charges this tax to you. Ultimately, the cost of that tax on AC was borne by the consumer. Why?
If you are using the AC, you need to bear the cost as well.
Remember, that AC is manufactured FOR YOU!
To summarise -
- We pay income tax because of exploitation of resources caused BY us.
- We pay service tax because of exploitation of resources caused FOR us.