JUNE 11, 2012

By R Subramanya, Advocate

ACCORDING to an official estimate there are around 2.8 million prostitutes operating in 400 ‘red-light areas’ in India. The Immoral Traffic in Women and Children (Prevention) Act, 1986 once called the Suppression of Immoral Traffic Act, is the main statute dealing with sexual activities in India. Last amended in 1986, when it got its current name, the Act as it stands does not criminalize prostitution or penalize sex workers. It mostly punishes soliciting, living off the earnings of prostitution, and procuring even where sex work is not coerced, seducing, detaining, brothel keeping, abetment to brothel keeping, renting premises for the purposes of prostitution, living off the earnings of a prostitute, and conducting activity in the vicinity of public places remained.

We are talking about the much hyped negative list of services and saying that it is going to be a paradigm shift as to how the services are taxed in our country. No doubt the entire scheme is smuggled into by the policy makers, and trying to give it an indianised version to call it ours.

While studying how the GST scheme works in developed countries, and how the services are taxed, I came across an interesting fact, yet very crucial. The services like brothel or escort agency services, prostitution services, services like ‘desi boyz’, and the like, where active flesh trade is involved, have not been a part of the negative list proposed by the Hon’ble Finance Minister.

The prostitutes and the brothels or the escort agencies of our country, who had been a neglected lot, and were victim of red tape bureaucratism, and exploited by the close knit mafia, politician-criminal nexus, and also the social inhibitions, would find that their services are not finding a place in the negative list in the Finance Act - 2012, and they will be liable to pay service tax.

The developed countries like the USA, Australia, Canada, Germany, Spain, etc all recognise prostitution as a service and allow them to earn their living with respect and also collect taxes on their earnings. Such brothels, and the individual prostitutes also get themselves registered with the government for health related issues of the involved persons.

The developed countries have enacted laws to keep a check on such activities. For eg. Like in Australia, under the Section 9(2) of the Prostitution Regulation Act, a prostitute has to submit a statutory declaration by a prostitute agency as prostitution service providers, to the Department of Justice (Licensing and Regulation). [emphasis:http://nt.gov.au/justice/department.shtml]. They also file an Annual return for brothel or escort agency with the same Department of Justice (Licensing and Regulation). Whereas, contrary to such facilities provided to the prostitutes in developed nations, their poor Indian counterparts are not fortunate enough and have to get exploited under the guise of Immoral Traffic in Women and Children (Prevention) Act, 1986.

Prostitution is such a profession in India that every adult must be aware of it, as one of the oldest profession to earn a living. The ministry of women and family welfare also maintains database of such women who are actively working as sex workers, and also the brothels and agencies. But such database is mainly dealing with control of STDs / AIDS and other health related issues, with the help of NGOs.

The brothels / escort agencies came to light and were interestingly being marketed in the media from June-2010. During the 13th Commonwealth Games, 2010, with large chunks of international audience flocking the nation, prostitution hugely thrived during the Games; attracting sex workers and traffickers who smuggle women from various cities and countries to meet the booming demand during the games. Many might also have been forced against their will to work as a Commercial Sex Worker to meet the growing demands. The mega prostitution extravaganza during the13th Commonwealth games seemed to have got an unofficial nod from the Indian government.

Some of the news items during late 2010, before the common wealth games, read as,

1. “Tina Jaiswal who owns the No 1 Delhi Escort agency said, “We hope to make good money during the games. We will simply follow the demand and supply principle of economics. We will double our rates a month before the games begin and increase our workforce.”

2. “The flow of money in brothels during the games is likely to be much higher than what the government of India is spending on overall expenditures to hold the event. The escort agencies have fixed the rates at Rs 23,000 per hour to charge the foreign “Clients,” which ultimately concludes to the tunes of millions of rupees more than what the government of India would be spending, making the already rich multi-million dollar industry richer.”

3. “The 12-days of sporting competition will be requiring 2000-5000 sex workers every day. Uday Sahay, Additional Director General (communications) Commonwealth Games said, “There are so many things which need to be discussed and this [prostitution] is one of them. We are in the process of discussing these things and hopefully a committee will be formed to tackle this soon.”

[Emphasis:http://www.youthkiawaaz.com/2010/06/prostitution-booms-as-commonwealth-approaches/]”

The only intention to bring the above news items is only to show as to how easily such news can be publicised, and huge amount of money is being flown in the flesh trade and only god knows what is happening to all those ladies who had been victimised or participated in the other side of the common games for wealth.

If the negative list of services fails to include the prostitution as a service and does not exempt the same from service tax, then subject to the threshold exemption, such brothels whose earnings crosses more than 10 lakhs would be subjected to service tax for providing such prostitution services.

To add to the woes and cries of such harassed lot, which are not at all heard and discussed in public forum, due to various obvious reasons including social stigma, the Hon’ble Finance minister, conveniently kept the flesh trade out of the negative list, and knowingly or unknowingly, has dangerously made such services as taxable under the Finance Act, 1994, once the Finance Act 2012 is put into effect. The intention is only to sensitise the law makers to be careful and have a foresight while drafting a law, which affects more than a billion citizens of our country.

Before parting...

Is it intentional of the Hon’ble Finance Minister to tax the flesh trade, or such an important section of the society was forgotten. When the funeral services, betting and gambling are included in the negative list, why impose service tax on the escort agencies, brothels, and why not grant exemption to such profession by including the same in the negative list. Can reverse charge be another option!!