Tax evasion case Essay Example for Free

Tax evasion case Essay Introduction Tax evasion is the illegal evasion of taxes by individuals, corporations and trusts. Tax evasion often entails taxpayers deliberately misrepresenting the true state of their affairs to the tax authorities to reduce their tax liability and includes dishonest tax reporting, such as declaring less income, profits or gains than the amounts actually earned, or overstating deductions. Tax evasion is an activity commonly associated with the informal economy. One measure of the extent of tax evasion (the tax gap) is the amount of unreported income, which is the difference between the amount of income that should be reported to the tax authorities and the actual amount reported. There is a difference between tax minimization/avoidance and tax evasion. All citizens have the right to reduce the amount of taxes they pay as long as it is by legal means. In contrast, tax avoidance is the legal use of tax laws to reduce ones tax burden. Both tax evasion and avoidance can be viewed as forms of tax noncompliance, as they describe a range of activities that intend to subvert a states tax system, although such classification of tax avoidance is not indisputable, given that avoidance is lawful, within self-creating systems. Tax evasion in India Tax evasion has always been a criminal offence in India. There are a number of provisions relating to prosecution under Chapter XXII of the Income-tax Act, 1961. Failure to file timely return of income, false statement and verification, willful attempt to evade tax, fabrication of accounts and documents and failure to deposit tax deducted or collected at source attract minimum rigorous imprisonment of three/ six months. Removal, concealment, transfer or delivery of property to thwart tax recovery or failure to afford necessary facilities for the officers during search operations are some more offences liable for rigid sentences. Abetment of false return, where it is  proved, would land not only the accused in trouble but those who help him, including those rendering professional assistance, providing for a rigorous imprisonment for a minimum period of three/ six months and a fine. Where the offence is rendered by a firm or company partners and the officers, including directors of t he company, may be responsible, unless they are able to prove that the offence was committed without their knowledge in spite of due diligence on their part. For the offence of the Hindu Undivided Family (HUF), the karta himself, besides all members, is deemed to be guilty, unless such members are able to prove that the offence was committed without their consent or connivance. Enforcement of law is also made easier for prosecution by statutory presumptions of culpable mental state placing the responsibility of proving innocence on the accused. Probation of Offenders Act, 1958, is not applicable for economic offences under the income-tax law, except for persons below 18 years of age. The law in India treats tax offences not only as a criminal offence but also has strengthened the same by statutory presumptions and minimum rigorous imprisonment subject to a maximum period of seven years. There are number of prosecutions launched year after year. It is difficult to accept that tax administration in India is â€Å"notoriously† slack and that there is a lot of political interference. More often the Department is known for its overzealousness, while the tax officers are comparatively independent protected by law. If they yield to political pressure, it cannot be solely the fault of the politicians. There are numerous instances, where the officers have not yielded to pressure from any quarters. If there is still significant tax evasion, it is as much a part of the system of limited scrutiny in vogue for the past several years and more probably because of all pervading corruption against which stiffer action is certainly necessary. As for comment relating to the proposed Direct Taxes Code Bill, 2010, provisions relating to prosecutions under Chapter XV in the proposed Code do not lighten the severity of the provisions under the present Act. The word â€Å"concealment† is not used in the context of prosecution either under the present Act or the proposed legislation. But there are provisions to tackle defaults of every kind. As regards penalty, the Code provides for levy of penalty automatically, wherever there is a difference between reported and assessed income. The removal of the word â€Å"concealment† takes away the need for inference of  intent to keep back any information relating to assessment. The law in the Code makes no difference between the delibe rate delinquency and the innocent omission so that the Code, as in most other aspects, is more stringent on the taxpayer. India loses 14 trillion rupees ($314 billion) from tax evasion annually, depriving it of funds for investment in roads, ports, and power, says Arun Kumar, author of The Black Economy in India. General government tax revenue is an estimated 18 percent of India’s $1.5 trillion in gross domestic product, the lowest among the four BRIC nations, International Monetary Fund data show. With so little revenue coming in, Prime Minister Manmohan Singh is now attempting India’s biggest overhaul of the tax code in half a century. Investors say tax reform would boost their confidence. â€Å"If the government does end up making a substantial amount in revenue as a result of the tax overhaul, their deficit requirements should come down and the interest burden will also come down,† says Killol Pandya, Mumbai-based head of fixed income investments at Daiwa Asset Management (India). About Anurag Kashyap Anurag Singh Kashyap (born 10 September 1972) is an Indian film director, producer and screenwriter. He famously is termed as an Art filmmaker who loves dark and real concepts. Kashyap made his directorial debut with as yet unreleased Paanch, with Kay Kay Menon as the lead. As a filmmaker, he is known for Black Friday (2004), a controversial and award-winning Hindi film about the 1993 Mumbai bombings, followed by No Smoking (2007), Dev D (2009), Gulaal (2009), That Girl in Yellow Boots(2011) and Gangs of Wasseypur (2012). As a screenwriter, he wrote the scripts for theFilmfare Award-winning Satya (1998) and the Academy Award-nominated Canadian filmWater (2005). He founded his film production company, Anurag Kashyap Films Pvt. Ltd. in 2009. In 1999, Kashyap won the Best Screenplay award for Satya at the Star Screen Awards. The next year, his short film Last Train to Mahakali won the Special Jury Award at the same awards. His feature film debut Black Friday won the Grand Jury Prize at the 3rd Annual Indian Film Festival of Los Angeles (2005), and was a nominee for the Golden Leopard (Best Film) at the 57th Locarno International Film Festival (2004). In 2010, he announced his association with Tumbhi where he  and his team will make six short films for Tumbhi and start his blog with them, as well. He was listed on the The DNA power list: Top 50 influentials, a list of 50 most influential Indians in 2011. Soon, he will be awarded with a cultural achievement award in the Cannes Film Festival. Kashyap currently serves on the board of Mumbai-based NGO, Aangan Trust, which helps protect vulnerable children around India. He is one of the most influential and important directors in India. Gangs of Wasseypur are a huge commercial and critical hit. Legendary Hollywood film-maker Martin Scorsese wrote to Kashyap, saying how much he loved Gangs†¦and Dev D. The two will be spending 15 days together at the end of the year. Kashyaps first big-budget film, Bombay Velvet, being co-produced by Fox Studios, went on the floors this month. Hes getting to direct Amitabh Bachchan, whose movies of the 70s greatly influenced him, for a fiction TV show. Megastars such as Shah Rukh Khan are keen to work with him. An Amitabh and a Ranbir working with me means they are coming midway, they want to do something different and dont want to be slaves of their image. That says a lot. We both are meeting midway. A Ranbir is as good or an even better actor than a lot of those on the fringes, says Kashyap. Case description Anurag Kashyap is in a light spot. The filmmaker has been held by the Service Tax department officials who have been keeping an eagle eye on B-town celebs for defaulting on taxes. From what we hear, the ST officials carried out an extensive investigation at Kashyap’s Yari road office in Mumbai a couple of weeks back and later charged him guilty for service tax evasion of Rs 55 lakh. Based on this, the director-producer was asked to appear before the Service Tax Department on August 22, but he failed to do so and sent his representatives to deal with the matter. Hence, Anurag’s accounts got sealed and he has now requested the department to grant him time until September 3. A team of officers from the Service Tax Department visited Anurag Kashyap’s office at Yari Road on 26 August between 2 pm to 10:30 pm and found him â€Å"guilty of Service Tax evasion to the tune of Rs 55 lakhs.† Anurag Kashyap was then summoned to appear before the Service Tax Commission on 27 August. But as he was still in Sri Lanka, he sent a representative. On the following day, his bank accounts were frozen, and now the ‘Gangs of Wasseypur’. Sameer Wankhede, Deputy Commissioner of the Service Tax Department confirmed that a case had been booked against Anurag Kashyap. A Service Tax official said, â€Å"Section 89 of the Finance Act says that if you have not paid your service tax to the tune of Rs 50 lakh for a period of six months, the defaulter can face imprisonment for a period of seven years and it is a non bail able offence. As of now, we have detected that Anurag has defaulted on over Rs 50 lakh. First it was the films budget that shot up by Rs 23 crore, thanks to the sinking INR and now the director has landed in legal tangles with the Service Tax Department. Anurag kashyap also has been accused of not filling taxes from the business he runs side by side. He is involved in the fashion industry and manufactures designer clothes for celebrities. This company is run under his ownership and is looked after by his wife. He has had a huge profit of approximately 2 crores in the year 2012 and he has not turned up to pay the taxes for it. It has also been reported that he had not paid wealth tax which amounts to 30cr. including the ornaments that he owns. According to the income tax authorities he is liable to pay a tax of 30 lakhs. Questions 1) Discuss the whole case in detail. 2) Evaluate the total tax that he is liable to pay according to the tax department authorities 3) Discuss the payment methods of these taxes in India. 4) How can the dispute be settled? 5) What is the future of these taxes in India? Ans 1) Analysis of the case The above described case is of the famous bollywood film-maker Anurag Kashyap. According to this case he failed to submit a service tax which amounted to Rs. 55 lakhs. After he gained a hug profit of 23 crore at the box office from his film Gangs of Wasseypur, he was supposed to submit this amount as service tax which he failed to do, and thus he had a raid by the  income tax officials in his office. He was found guilty and his accounts were immediately ceased. The second tax that he failed to pay is the income that he is earning from the house in the name of his daughter. Under this head, tax amounts to rs. 000. This income is taxed under the income from other sources. The second tax evasion that the income tax authority finds him guilty of is the income from his designer clothes manufacturing company which was supposed to earn a profit of 19000000. He has tried not to show this income as a part og his total taxable income. The income tax authority says that the total tax due under this head should be around 55lakhs Anurag Kashyap has been found guilty of not paying tax under three heads i.e. service tax, earnings from other sources, and wealth tax. Ans 2) Calculation of the total tax Service tax; Total earnings in the year 2012-13 from the box office Rs.23,00,00,000 Taxable income after the net deductions Rs. 4,45,00,000 Service tax (@12.36% (10+2+1) = 55,00,000 wealth tax: total taxable wealth Rs.3,00,00,000 rate of wealth tax (1% over 30lakhs) Rs.27,00,000 tax from business and proffession: profit a/c to profit and loss account Rs. 1,90,00,000 income tax payable Rs. 55,30,000 Education Cess @ 2% Rs.110600 Secondary and Higher Education Cess @ 1% Rs. 55300 Total (Rs. 55lakhs+27lakhs+ 5695900) = Rs.1,38,95,900 Ans3) Pament of service tax in india Service tax is envisaged as the tax of the future. Well synchronized taxation on manufacturing, trade (domestic international) and service without giving rise to cascading effect of taxation would be an ideal worth pursuing in the immediate future. This would bring in VAT in its truest sense, though the ultimate objection ushers in the regime of Goods and Service Tax (GST). Continued growth in GDP accompanied by higher rate of growth in service sector promises new wider avenues of taxation to the Government. If the tax on services reduces the degree of intensity of taxation on manufacturing and trade without forcing the Government to compromise on the revenue needs, then one of the basic objectives of taxing the service sector would be achieved. Voluntary tax compliance on the part of taxpayers demands prudent accounting practices and transparency in the conduct of their business. Marginal rates of taxation would be conducive in this process. Many new services may be brought under the tax net in future. The inclusion of all value added services in the tax net would yield larger amount of revenue and make the existing tax structure more elastic. Advanced economies of Western Europe, North America and Far East have share of service sector in their GDP ranging from 60% to 80%. The growth in absolute quantum of GDP and proportion of Service-sector in GDP holds promise for larger revenue generation without increasing the existing level of taxation The Goods and Services Tax (GST) is a Value Added Tax (VAT) to be implemented in India, the decision on which is pending. It will replace all indirect taxes levied on goods and services by the Indian Central and State governments. It is aimed at being comprehensive for most goods and services. India is a federal republic, and the GST will thus be implemented concurrently by the central and state governments as the Central GST and the State GST respectively. Exports will be zero-rated and imports will be levied the same taxes as domestic goods and services adhering to the destination principle. The service tax rate in india is 12% which is calculated on the net taxable income. It also includes an education cess of 2% and a senior higher secondary cess of 1%. Thus a consolidated percentage of 12.36% is calculated on the taxable amount. According to the case the director was liable to pay a roundabout sum of Rs.55 lakh on a profit of 23crore which he earned last year. Payment of wealth tax in India The Wealth Tax Act 1957 is governed by the Income Tax department that falls under the Department of Revenue. Just like Income Tax, Wealth Tax forms a part of annual assessment. It is a type of direct tax that is levied on individuals that fall under its purview. This is a tax that is charged on the net wealth of those who fall under its purview. The benefits that you derive from ownership of property are taxed under this head. Other assets that come under the purview of wealth tax are motor car, aircrafts, and yachts, cash in hand, jewellery etc. You are required to pay wealth tax on yearly basis on the market value of your property irrespective of the fact that it generates any income for you or not. Wealth Tax is Applicable To: Individuals, Companies, Hindu Undivided Families (HUFs) The Wealth Tax as of now is 1 percent on the net taxable wealth of the assessee that exceeds the limit of Rs 30 Lacs. Assets that are charged under Wealth Tax in India House Property (Guest House, residential house or commercial) Urban Land Boats, Aircrafts and Yachts Motor Car Cash in Hand (subject to certain limits) only for HUFs and Individuals Jewellery, Gold Utensils, Silver, Bullions etc All assets that are transferred by individuals to their minor children and to spouse for considerations that are inadequate also fall under the purview of wealth tax. Payment of income from business and profession For charging the income under the head Profits and Gains of business, the following conditions should be satisfied: There should be a business or profession. The business or profession should be carried on by the assessee. The business or profession should have been carried on by the assessee at any time during the previous year. Income that will be chargeable to income tax under the head Profits and gains of business or profession’ The following income would be chargeable under the head Profits and gains of business or profession: The profits and gains of any business or profession, which was carried on by the assessee at any time during the previous year; Any compensation or other payment, due or received by the following:- Any person, by whatever name called, managing the whole or substantially the whole of the affairs of an Indian company, at or in connection with the termination of his management or the modification of the terms and conditions relating thereto; Any person, by whatever name called, managing the whole or substantially the whole of the affairs in India of any other company, at or in connection with the termination of his office or the modification of the terms and conditions relating thereto; Any person, by whatever name called, holding an agency in India for any part of the activities relating to the business of any other person, at or in connection with the termination of any agency or the m odification of the terms and conditions relating thereto; Any person, for or in connection with the vesting in the Government, or in any corporation owned or controlled by the Government, under any law for the time being in force, of the management of any property or business; Income, derived by a trade, professional or similar association from specific services performed for its members; Profits on sale of a license granted under the Imports (Control) Order, 1955, made under the Imports and Exports (Control) Act, 1947; Cash assistance (by whatever name called), received or receivable by any person against exports under any scheme of the Government of India; Any duty of customs or excise repaid or repayable as drawback to any person against exports under the Customs and Central Excise Duties Drawback Rules, 1971; The value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise of a profession; Any interest, salary, bonus, commission or remuneration, by whatever name called, due to, or rece ived by, a partner of a firm from such firm. However, it is provided that where any interest, salary, bonus, commission or remuneration, by whatever name called, or any part thereof has not been allowed to be  deducted under Clause (b) of section 40, the income under this clause shall be adjusted to the extent of the amount not so allowed to be deducted. Deductions that are allowed in computing income from profits and gains of business or profession A number of other deductions under Section 36 of the Income-Tax Act are allowed while computing income from profits and gains of business or profession: S36 (i): The amount of any premium, paid in respect of insurance against risk of damage or destruction of stocks or stores, used for the purposes of the business or profession; (ia) The amount of any premium, paid by a federal milk co-operative society to effect or to keep in force an insurance on the life of the cattle owned by a member of a co-operative society, being a primary society engaged in supplying milk, raised by the members of such federal milk co-operative society; (ib) The amount of any premium, paid by cheque by the assessee as an employer to effect or to keep in force an insurance on the health of his employees under a scheme, framed in this behalf by the General Insurance Corporation of India, formed under section 9 of the General Insurance Business (Nationalization) Act, 1972 (57 of 1972) and approved by the Central Government; (ii) Any sum, paid to an employee as bonus or commission for services rendered, where such sum would not have been payable to him as profits or dividend if it had not been paid as bonus or commission; (iii) The amount of the interest paid in respect of capital borrowed for acquisition of the asset from the date it is put to use for the purposes of the business or profession; (iv) Any sum, paid by the assessee as an employer by way of contribution towards a recognized provident fund or an approved Superannuation fund, subject to such limits as may be prescribed for the purpose of recognizing the provident fund or approving the Superannuation fund, as the case may be; and subject to such conditions as the Board may think fit to specify in cases where the contributions are not in the nature of annual contributions of fixed amounts or annual contributions, fixed on some definite basis by reference to the income chargeable under the head Salaries or to the contributions or to the number of members of the fund; (v) Any sum, paid by the assessee as an employer by way of contribution towards an approved gratuity fund created by  him for the exclusive benefit of his employees under an irrevocable trust; (va) Any sum, received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employees account in the relevant fund or funds on or before the due date. (vi) In respect of animals which have been used for the purposes of the business or profession, otherwise than as stock-in-trade and have died or become permanently useless for such purposes, the difference between the actual cost to the assessee of the animals and the amount, if any, realized in respect of the carcasses or animals; (vii) Subject to the provisions of sub-section (2), the amount of any bad debt or part thereof which is written off as irrecoverable in the accounts of the assessee for the previous year; (viia) in respect of any provision for bad and doubtful debts made by the following: A scheduled bank or non scheduled bank, an amount not exceeding five per cent of the total income and an amount not exceeding ten per cent of the aggregate average advance made by the rural branches of such bank computed in the prescribed manner; A bank, being a bank incorporated by or under the laws of a country outside India, an amount not exceeding five per cent of the total income; public financial institution or a State financial corporation or a State industrial investment corporation, an amount not exceeding five per cent of the total income. (viii) In respect of any special reserve created by a financial corporation which is engaged in providing long term finance for industrial or agricultural development in India or, by a public company formed and registered in India with the main object of carrying on the business or providing long term finance for construction or purchase of houses in India for residential purposes, an amount not exceeding forty per cent of the total income can be carried to the reserve account; (ix) Any bona fide expenditure incurred by a company for the purpose of promoting family planning amongst its employees; (x) Any sum, paid by a public financial institution by way of contribution towards any Exchange Risk Administration Fund, set up by public financial institutions, either jointly or separately. (xi) Any expenditure, incurred by the assessee on or after the 1st day of April 1999 but before the 1st day of April 2000, wholly and exclusively in respect of a non-Y2K compliant computer system, owned by the assessee and used for the purposes of his business or profession, so as to  make such computer system Y2K compliant. (xii) Any expenditure (not being in the nature of capital expenditure) incurred by a corporation or a body corporate, by whatever name called, constituted or established by a Central, State or Provincial Act for the objects and purposes authorized by the Act, under which such corporation or body corporate was constituted or established. It is important to note that deductions are subject to certain conditions being satisfied. Deductions allowed in respect of rent, rates, taxes, repairs and insurance for premises, which are used for the purpose of business or profession? S 30: The deductions that are allowed while computing income from profits and gains from business or profession in respect of rent, rates, taxes, repairs and insurance for premises, which are used for the purpose of business or profession while computing income from profits and gains from business or profession are as follows: Where the premises are occupied by the assessee: 1. As a tenant, the rent paid for such premises; and further if he has undertaken to bear the cost of repairs to the premises, the amount paid on account of such repairs; excluding expenditure in the nature of capital expenditure. 2. Otherwise than as a tenant, the amount paid by him on account of current repairs to the premises; excluding expenditure in the nature of capital expenditure. Any sums, paid on account of land revenue, local rates or municipal taxes; The amount of any premium, paid in respect of insurance against risk of damage or destruction of the premises. Deductions to be allowed in respect of repairs and insurance of machinery, plant and furniture. The following deductions shall be allowed in respect of repairs and insurance of machinery, plant and furniture: The amount paid on account of current repairs thereto; excluding expenditure in the nature of capital expenditure. The amount of any premium, paid in respect of insurance against damage or destruction thereof. Ans 4) Settlement of disputes Settlement of disputes could be done through Norms of industrial disputes act 1947 Work committee Voluntary arbitration Court of enquiry Ans 5) Future of service tax in India Service tax in India was introduced in 1994-95 to correct the asymmetric treatment of goods and services in the tax framework and to widen the tax net. Need to introduce service tax was felt due to the fact that service sector contributed to around half of GDP but it wasn’t taxed. The numbers of services liable for taxation were gradually raised from 3 in 1994-95 to virtually all service in budget 2012-13 except for the services enlisted in the negative list. The negative list includes the services by Government or a local authority, services by the Reserve Bank of India, Services by a foreign diplomatic mission located in India, services relating to agriculture, Service of transportation of passengers, Funeral, burial, crematorium or mortuary services etc. In the last eight odd years, after a modest beginning, service tax had become one of the most important sources of government revenue. Budget 2012-13 increased the service tax rate from 10 percent to 12 percent. Already, a cess is imposed on all indirect taxes including service tax to finance secondary and higher education. In 2011-12, Rs 95,000 crores are expected to mop up through service tax and for 2012-13, target is to collect as much as Rs.1.24 Lakh crores. The increase in service tax is opposed by different section of the business community. At present, service sector contributes more than 55 percent of GDP and its share is likely to increase in future as it is poised to grow between 8-10 percent in next decade along with the reduced share of primary sector. This offers tremendous revenue potential to the Government. It is expected that in due course, service tax would reduce the tax burden on international trade (Customs duty) and domestic manufacturing sector (Excise duty). So a planned growth of service tax would be commensurate with the goals of economic  liberalization and globalization. This process requires levy of taxes on new services without substantial rise in the rate or cost of collection. The service tax promises many opportunities as well as challenges to realize the opportunities. For instance, increased revenue through service tax will help in bridging the fiscal deficit, finance the social services, reduce the burden on commodity taxes etc. The challenges include providing more simplified tax administration in the country which will reduce the tax evasion. Further, department should intensify the field survey operations to ensure that all taxable service assessees are brought into the tax net and service tax due from them are collected without hitch. While the basic tenet of voluntary compliance of service tax law has to be adhered to, the habitual evaders of service tax must be booked for appropriate action under the law. Effective use of Audit and Anti-evasion tools for ensuring the compliance on the part of the assessee and curbing the instances of irregularities and tax evasion are the need of hour. Greater emphasis should be laid on training the staff in Information Technology skills necessary to carry out effective, systematic and result oriented analysis of data available in the system, to achieve the target. Electronic Tax Administration (ETA) system for service tax should be effectively implemented so that service tax could be administered as a pioneer e-tax of the country. Adequate staff must be deployed along with suitable infrastructure and conveyance to implement service tax law effectively. In future, service tax will be integrated with commodity taxes to give rise to the Goods and Service Tax (GST). The proposed Goods and Service Tax is the part of the tax reforms that centre around evolving an efficient and harmonized consumption tax system in the country. Presently, there are parallel systems of indirect taxation at the Central and State level. The existing service tax system poses an imminent challenge to reform its synergies to eventually harmonize itself in the GST regime. Successful integration of goods and service tax would give India a world-class tax system and will bring in improved tax collection. In a way, it will boost our economy and enable us to compete at the global front. As a result, our system will eventually match the international standard in the sphere of indirect taxation. It will also end the long standing distortions  of differential treatments to the manufacturing and service sectors. GST would be a single comprehensive indirect tax to be levied on goods and services. It would be levied at every production and distribution chain with the eligibility to claim indirect taxes paid on procurement chain. Under the current regime, there is a fractured credit mechanism where businesses dont get credit for all the taxes they pay. The effort to prepare for a smooth integration with the GST without any hardship to public is a big challenge, which needs to be handled at the field as well policy level. GST is the future of all indirect taxes in India for which a consensus is needed between the central and state governments. It was supposed to be implemented from 1 April 2010 but is postponed every year due to lack of consensus. The delay in the implementation is causing loss to the tune of thousands of crores every year which could have gained in by increased efficiency. The central government should come forward with some form of incentive driven plan to bring the GST regime in the country which poised to put the fiscal administration of the country at higher level. References http://www.mbarendezvous.com/topimagearchives.php?id=355 http://www.caclubindia.com/quickfinder/service-tax-calculation-india.asp#.UiP7VdLdfJg http://www.bollywoodlife.com/news-gossip/anurag-kashyap-owes-rs-55-lakh-to-service-tax-department-will-he-be-arrested/ https://www.google.co.in/url?sa=trct=jq=esrc=ssource=webcd=3cad=rjaved=0CDkQFjACurl=http%3A%2F%2Fbusinessofcinema.com%2Fnews%2Fcould-anurag-kashyap-land-up-in-jail%2F98116ei=gfsjUsDVDYK0rAeAmoDQBgusg=AFQjCNHHk9zeHujTfzL_gqfBg2jryJF8Fgsig2=99AMtBdnEzLkH82GEohh-A http://articles.timesofindia.indiatimes.com/2013-08-30/news-interviews/41618212_1_anurag-kashyap-service-tax-department-bombay-velvet http://www.muskurahat.pk/bollywood-news/anurag-kashyap-bank-accounts-frozen-for-service-tax-evasion.html http://law.incometaxindia.gov.in/DIT/Xtras/taxcalc.aspx http://web.tnmgrmu.ac.in/vc/articles/evadingtax.pdf

The Secret to Creation Essay Example for Free

The Secret to Creation Essay The famous genius, scholar, and life scientist Victor Frankenstein already died shortly after he was rescued by Captain Robert Walton in the middle of North Pole. The remains of Dr. Frankenstein lie at his wake inside the ship of Capt. Walton. It is reported that during the wake of the famous life scientist, a creature was seen by Capt. Walton. The said creature is believed to be made by Dr. Frankenstein himself as an effort to discover the secret of creation of living things. The creature is greenish in color, eight-feet tall, resembles the feature of a human, but is extremely hideous in appearance. It told Capt. Walton of the remorse and solitude that he felt upon his creator’s death. The monster went to the North Pole and planned to kill himself because, according to him, he is of no value anymore. Capt. Walton retold Dr. Frankenstein’s account to the local investigator and attested that the culprit in the past murders that happened in the Frankenstein’s family is the monster Surname 2 itself. The death of Dr. Frankenstein’s brother, William Frankenstein,in Geneva, the death of Dr. Frankenstein’s best friend, Henry Clerval, and the death of Elizabeth Frankenstein, wife of Dr. Frankenstein, are done by the monster out of anger towards his creator. Because of the deaths of his loved ones, Dr. Frankenstein followed the monster that he created to get his revenge. However, Dr. Frankenstein was trapped in the floating iceberg where he was rescued by Capt. Walton. Dr. Frankenstein grew up at Geneva and studied natural philosophy and chemistry at Ingoldstadt University. He pursued on researching the secret of life and was successful in finding out how the main element that gives life to a person. He completed his research by creating a monster in his apartment one evening. Unfortunately, Dr. Frankenstein wasn’t able to pass the knowledge about the secret of life that he discovered. Upon his death, this secret will be buried with him and will continue to be a mystery in the human race.

Vindication Of The Rights Of Woman

Vindication Of The Rights Of Woman When in 1792 the French minister for education proposed a revolutionary system of state-supported system of public education for men only, Mary Wollstonecraft was outraged. As a concrete embodiment of the French revolutions promise to redress the wrongs of past, this proposal seemed a betrayal of all that the revolution stood for. Wollstonecraft responded with A Vindication of the Rights of Woman, arguing a simple principle: that if she (woman) be not prepared by education to become the companion of man , she will stop the progress of knowledge and virtue ; for truth must be common to all or it will inefficacious with respect to its influence on general practice. Just one year earlier she had leapt to the defense of Richard Price and Thomas Paine in her Vindication of the Rights of Men against the attack of Edmund Burke in his Reflections on the Revolutions in France, she now turned her attention to the injustice that presented itself in this revolutionary program for universal educa tion in France. The context of the Vindication of the Rights of Woman was written as a response to Rousseaus immensely influential book Emile, which laid out Rousseaus vision of how boys should be educated. In the process Rousseau created a character; a female associate for Emile named Sophie and in the process slighted the education of women. In this essay we would explore that how successfully Wollstonecrafts Vindication of the Rights of Women is expressing the ways in which women could improve themselves and how society would benefit from this in 1790s and how affected the impact on patriarchal oppression and on the feminism as a whole. J.J Rousseau primarily claimed that we are inherently good, but we become corrupted by the evils of society. We are born good and that is our natural state. Through attending to nature we are more likely to live a life of virtue. In Emile, which is Rousseaus influential book, he was able to dramatize his ideas and reach a very wide audience. He made, it can be argue, the first comprehensive attempt to describe a system of education according to that he saw as nature. In his educational theories Rousseau attempted to preserve natures pure state. His concept of negative education allowed a child to discover for himself and to be punished by the nature he sought to defy. The tutor must not try to reason with the child or show authority. Books would not be forced on the child; at twelve Emile would hardly know what to do with a book. Positive education, or direct instruction, would only begin at approximately the age of adulthood, and then the studies would be based on the students natur al curiosity. Rousseau stressed utility, the need for teaching things with practical applications. This concept of negative education as applicable to women was totally inconceivable to Rousseau. Rousseau outlines his theories for the ideal education for the women in chapter V of Emile. He viewed womens options as entirely limited to the roles of wife and mother. What need would there be to allow her to determine for herself when nature had already physiologically dictated her destiny Rousseau demanded a reversion to primitivism in the education of women, offering minimal vocational training while insisting on her inability to reason and her inferiority to man. A womans education must be planned in relation to man.[S]he will always be in subjection to a man, and she will never be free to set her own opinion above his.(Rousseau p:176). He stresses freedom of movement and physical exertion for Emile, asserting that weak bodies contain weak minds. At the same time he discourages Sophie from too much physical activity and uses her weakness as another proof of her inferiority. The object of that cultivation is different. In the one sex it is the development of corporeal powers; in the other, that of personal charms, (Rousseau:pp.322) The power a woman have in Roussseaus poltical doctrine is dependent on the power allotted them by nature. And that power can be reduced to a simple law of nature. For nature has endowed woman with a power of stimulating mans passions in excess for mans power of satisfying those passions, and has thus made him dependent on her goodwill, and compelled him in his turn to endeavor to please her, so that she may be willing is superior strength. Is it weakness which yields to force, or is it voluntary self-surrender? This uncertainty constitutes the chief charm of the mans victory, and the woman is usually cunning enough to leave him in doubt. (Emile: 387) Rousseau emphasized the fundamentally different roles of men and women, he considers men and women complimentary to each other , women roles is to nurture and essential if men free to take on public roles and warrior and politicians. In Emile,Sophie is his sexual identity. Rousseau considers a mans union with a woman a debasement of his nature. Rousseau has a view of marriage apparently quite traditional in many respects, but he does not defend that arrangement traditionally. Rousseaus Emile makes the wife responsible for keeping the man at home and she is to maintain in him a sense of his freedom and yet at the same time use all sort of feminine charms and intelligent deceptions to make sure that he wants to stay at him, still free but also fulfilling his parental duty. Rousseau considers wifes job, simply put, is to deceive the man into staying at home by sustaining for him the illusion of his freedom, by serving his need for such a psychological state, that point is discussed by W ollstonecraft that if Sophie has to play complicated role of such a smart understanding wife, she has to know the men traits and nature, psychology of men to deal with them. Rousseau anticipates this stance and argues against it, making the case that if women seek to compete with men by defining themselves in terms of male virtues, then they will foster a state of society in which they are even more than before the servants of men. Men are better at being men than women are, Rousseau claims. Rousseau explains that Sophies education needs to be different because she is to be future mother, and women are designed by nature for motherhood. While insisting on the importance of motherhood, he stumbles on womens role as mothers. In addressing mothers in Book I of Emile, he acknowledges their primacy in the education of youth. By denying women the ability to reason he denies them the ability to raise children, which Mary Wollstonecraft later attempts to prove. Mary Wollstonecraft applauded Rousseaus scheme for Emile but deplored the neglect of Emils perfect wife, Sophie in her book The Vindication of the Rights of Woman written in response to Rousseau. Wollstonecraft seeks to find a rational explanation for the state of her sex. She questions whether women are really created for the pleasure of men. She initiates her attack on patriarchal oppression in the first page of the introduction explaining how men have created books `considering females rather as women than human creatures, have been more anxious to make them alluring mistresses than affectionate wives and rational mothers (P:11): then on Sophies garb simple as it seems, was only put in its proper order to be taken to pieces by the imagination. To this she retorts, Is this modesty ? Is this a preparation for immortality? she accuses Rousseau of depicting not a wife and sensible mother, but a pleasing mistress. She challenges Rousseaus depiction of men having superior strength and free will to do experiences. Let us then , by being allowed to take the same exercise as boys, not only during infancy , but youth, arrive at perfection of boys, that we many know how far the natural superiority of man extends. She firmly endorses the nothing of the public space in which people can compete, she says, in effect, give women access to this public space, and if we can not hold our own , then lets concede that women are not the same as men and change things accordingly. But let us first give women a chance. In the period prior to the enlightenment women were legally and socially inferior. One example of this is in crime: a man convicted of murdering his wife would be hanged, but a woman convicted of murdering her husband would, by law, be burned alive (Misenheimer,1981:p21). They were also unequal in financial and property rights, women were uneducated and taught to be pure and respectable so they could gain a husband and a home and the legal position of most women totally dependence on their husbands (Mill,1878). Its quite clear that Wollstonecrafts world did have considerable oppression and it was within this context that her attack on male dominance of society was based. She expresses how women are `legally prostituted, attacking marriage and the power men have through marriage (P:75). She attacks that women can only advance through marriage explaining how its the only security of public freedom and universal happiness (P:18). She also argues heavily against the socially constructed' position of women, which has been forced upon them by men. This is possibly her strongest argument against male dominance which conforms to the ideas of what is natural and what has been created by man; similar to the ideas of Thomas Paine, Rousseau. The idea is that the subjugation of women is unnatural and obviously goes against rational, enlightened and more important moral society. Wollstonecraft argues that if marriage is strongest institution and cement of society then men and women should be educated equally regardless of their sexes and marriage never can be held sacred till women, by being brought up with men, are prepared to be their companions rather than their mistresses. Wollstonecraft proposes that education should be accessible through national establishments as private education is confined to only elite class. She proposes her radical idea of educating girls with boys and that girls should be taught anatomy and medicine to make them rational nurses of their infants, parents and husbands. As living in mens society Wollstonecraft realized that her suggestions can cause a stir, hence the major pitch of her appeal for the rights of women might be seen as a call to extend to women the same educational opportunities as those extended to men. She cautions that she has no desire to breed a generation of independent and unattached women like herself, but that she seeks to develop wiser and more virtuous mothers. She believes that childrens characters are formed before the age of seven; hence it is very necessary to raise a child by an educated mother rather than by addle-headed mother. Wollstonecraft trying to make the male society of her time to realize that present education of women focuses far too much on attempts to please and tease men , which is no good basis either for the development of a morally responsible personality , longer lasting marriages or good mothers. And if we educate our women as equal to men, society can really benefit and if they continue to be excluded, society will suffer, it will not progress. Without stressing independence she believes that once women gain intellectual equality, they should be given political and economic equality as well. A Vindication of rights of Woman was a vital piece of work for the Feminists, however it did not really get appreciated among the women of 18th century. It is quite clear that her thoughts were revolutionary for her period and were more suited to the society of the late Nineteenth and early Twentieth century, when feminists would reintegrate Wollstonecrafts work into their movements. But Rousseaus point is still being made by those who think that a good deal of mainstream liberal feminism, for all its impressive record of social and political achievements, is demanding that women live by a standard foreign to them, that they become like men rather than developing fully as women. Those who, like Wollstonecraft, deny the classification of men and women as different, and this debate between Rousseau and Wollstonecraft is still very much alive in modern arguments about feminism. The present fierce arguments between and within various mens and womens groups indicate that the question is n ot yet off the table. These arguments manifest themselves, among other things, in modern concerns about the rising frequency of divorce and of men abandoning their families, of super-moms, of teenage pregnancies, of the need for men to be in control of the family, and so on, all of which remind us that two hundred years after Wollstonecrafts important contribution this great debate, the conversations continue with no loss of urgency.

The Intricacies of Cubanness :: Personal Narrative Writing

The Intricacies of Cubanness â€Å"Hey bro, en Hialeah me quedo,† I said to my friends Eddie Safille, Alex â€Å"G† Gonzalez and Orlie Castelblanco as we finished up our Cuban coffee while playing a game of dominos. Eddie, in an enthusiastic voice, answers, â€Å"You better believe I’m staying in Hialeah. This place is our home.† We all love Hialeah, as city in Miami-Dade County located a few miles from Miami city limits and is predominantly Cuban. Hialeah is one of the only cities in this country where we don’t feel like a minority. We cling to our Cuban culture like a python clings to its prey while it squeezes the life form its lungs with its muscular body. I feel a strong bond with my Cuban heritage, every time I play my bongos, every time the Salsa beat moves my feet across the floor like a hurricane taking a town by storm, or every time I drink some cafà © while playing dominos in the park or behind La Carreta restaurant. One of my favorite memories is of my friends and I playing a game of dominos at Bayfront Park downtown with Latin music in the background, feeling the ocean breeze brush against our faces, and seeing all the skyscrapers tower over us in a seemingly endless bundle of beauty and majesty. The city, with its sun-splashed avenues has treated the Cuban people with love and respect and has contributed to my pride in where I’m from. I like to think of my cultural heritage as a chocolate chip cookie. The dough of the cookie is an Americanized version of both Cuban and Lebanese cultures making up the majority of the cookie, while the chips are a mix of many cultures that have influenced me in smaller ways, such as my father’s Irish roots. The reason the Cuban and Lebanese cultures because the most predominate is mostly as a result of how I grew up. All my life I have lived with my parents, and my mother’s parents. Although both my Cuban and Lebanese influences have greatly impacted my life, my Cuban-American culture is without doubt the most influential of all. The first language I spoke was Spanish. Most of my friends are also of Cuban decent, and the city that I grew up in, Miami, is a strong hold of Cuban power in the United States.

Electoral Gender-Based Quotas Essay -- Political Science

Hillary Rodham Clinton once said, â€Å"There cannot be true democracy unless women's voices are heard.† In 2006, when Nancy Pelosi became the nation’s first female Speaker of the House, one woman’s voice rang out clear. With this improvement, democracy grew to its truest level ever in terms of women’s equality. Regretfully, female candidates had never been so lucky in the past. There was a time when female candidates were highly underestimated; Men always had higher chance of being selected to any electoral office than any female had, even though they both might have been well qualified for that post. Never in the history of America, males politicians had wanted to recognize those women’ potential and true values; thus, sick and tired of always being misjudged, remarkable females had manifested their desire for equal representation, equal citizenship and equal rights by persistently debating and pleading. Opportunely for them, by the end of 1967 so ciety finally decided to acknowledge the females’ rights; accordingly, several countries decided to establish the gender - based quotas through the affirmative action in order to benefit them. Nowadays, the affirmative action is a growing argument in our society. Some can define it as a quota-based system in which people from different minority groups struggle for their equality and inclusiveness, while others might see it as an unfair way to benefit unqualified groups. But, what is it exactly? The affirmative action mostly refers to rules designed to provide groups that have suffered from discrimination on the ground of race, ethnic and gender in the past, greater opportunities with the principal aim of giving them preferential treatments. Unquestionably, it has aroused jealousy and tons... ... gain something from it. Males’ politicians gain a feminine support, females get to show their skills to the world while us citizens, get to live in a better world in which the government is really looking forward to provide us a superior quality of life. As Suzan Anthony famously said, â€Å"It was we, the people; not we, the white male citizens; nor yet we, the male citizens; but we, the whole people, who formed the Union; Men, their rights and nothing more; women, their rights and nothing less†. Works Cited †¢ http://www.quotegarden.com/feminism.html †¢ http://www.quotaproject.org/aboutQuotas.cfm †¢ www.wikipedia.org †¢ "Women Represent Only 19 per Cent of Membership in Parliament Worldwide – Speaker." Vibe Ghana. 29 Nov. 2011. Web. 29 Nov. 2011. .

Essay --

What exactly is a hipster? Dictionary.com defines one as "a person, especially during the 1950s, characterized by a particularly strong sense of alienation from most established social activities and relationships". Throughout history, there have always been droves of individuals who choose to be nonconformists. This is a lifestyle that labels such people as outcasts, hippies and beatniks. Those who are labeled as such endure a rough lifestyle, whether it is living in nature or perhaps walking the streets as a vagabond. These people live by complex philosophies, but to what purpose? I’m fascinated by the fact that they experience discrimination and ridicule, but choose to keep living with it. So exactly what is the appeal to counterculture? What is it about modern society and the mainstream that causes these people to ostracize themselves and announce their individualism? That’s what I hope to find out. I decided to track back to the roots of counter culturist movements. I discovered that after World War II, the nation’s economy boomed and fear began to grow over the growing nuclear arms race. Concern about the future led many young people to become more active in social causes, from the civil rights movement to President Kennedys Peace Corps. This generation was known as the beat movement, it defined an ideology for disaffected, rebellious youth of that decade. Due to the economic boom, many people could afford to go to college and enrollment rose from 3.1 million to almost 5 million. Protest began to rage across the country. The beat movement led to many new youth culture movement in the coming years, such as hippie culture. The hippies represented a rebellion against mass culture in the U.S. They rejected traditional values an... ...ed to hold their own place in history and be known for fixing an issue or perhaps toppling the government in their own obscure fashion. I believe that growing numbers of non-conformists happens to be ironic and an entirely different situation on its own, but perhaps it’s for a more personal reason. Looking at history up to now, one would address my earlier conjecture, who would want to put themselves through hell and ridicule, most likely knowing that they cannot cause upheaval alone? I believe that it is due to the fact that none of these people are comfortable being mixed into a crowd. They strongly look towards transcendentalism to individualize themselves. The youth doesn’t want to be labeled as a just another number. They want to feel important and be their own person. Riots and violent protests might not be the most orthodox solution, but it sure is effective.

Cost-Effective Service Excellence: Lessons from Singapore Airlines

Cost-effective service excellence: lessons from Singapore Airlines Singapore Airlines is well known as a paragon of in-flight service. It is also a remarkably efficient and profitable airline and has been for decades. Loizos Heracleous, Jochen Wirtz and Robert Johnston explain how it combines service excellence with cost effectiveness. Singapore Airlines (SIA) has achieved the Holy Grail of strategic success: sustainable competitive advantage.It has consistently outperformed its competitors throughout its 30-year history. In addition, it has always achieved substantial returns in an industry plagued by intermittent periods of disastrous under-performance (see Table 1). Cost-effective service excellence: lessons from Singapore Airlines SIA has done this by managing to navigate skilfully between poles that most companies think of as distinct – delivering service excellence in a costeffective way. SIA’s awards list is long and distinguished.In 2002 alone it won no less tha n 67 international awards and honours including â€Å"best airline† and â€Å"most admired airline† in the world in Fortune’s Global Most Admired Companies survey. Spring 2004 G Volume 15 Issue 1 Business Strategy Review 33 Since Michael Porter’s influential suggestion that differentiation and cost leadership are mutually exclusive strategies and that an organisation must ultimately choose where its competitive advantage will lie, there has been fierce debate about whether a combined strategy can be achieved – and sustained over the longer term.SIA is proof that the answer to both these questions is positive. So, how does it consistently deliver premium service to demanding customers in an industry where both price pressures and customer expectations have been continually rising? In common with many other organisations with a reputation for providing excellent service, SIA has top management commitment to service, customer-focused staff and systems , and a customer-oriented culture. However, our research into SIA, spanning many years and at all levels in the organisation, has uncovered a umber of insights into developing and maintaining a reputation for service excellence that is applicable to a wide range of service organisations. Ultimately, SIA’s success is attributed to a customer-oriented culture, its recognition of the importance of its customers. â€Å"Our passengers are our raison d’etre. If SIA is successful, it is largely because we have never allowed ourselves to forget that important fact,† says Dr Cheong Choong Kong, former CEO of SIA. However, what distinguishes SIA’s culture is that these are not just abstract, â€Å"motherhood† statements.The values of cost-effective service excellence are enshrined in a unique, selfreinforcing activity system that makes the values real for all employees. We found that the five pillars of this activity system (see Figure 1) are: G rigorous ser vice design and development G total innovation (integrating continuous incremental improvements with discontinuous innovations) G profit and cost consciousness ingrained in all employees G holistic staff development; G reaping of strategic synergies through related diversification and world-class infrastructure.Rigorous service design and development Twenty years ago Lyn Shostack complained that service design and development is usually characterised by trial and error. Unlike manufacturing organisations, where R&D departments and product engineers were routine, systematic testing of services, or service engineering, was not the norm. Things appear to have changed little since then. SIA, however, has always regarded product design and development as a serious, structured, scientific issue. Performance metrics Revenues $m SIA United Northwest Continental American DeltaBA Cathay KLM Quantas 5,133 16,138 9,905 8,969 18,963 13,879 12,103 3,903 5,788 5,207 Net income (loss) $m Net profit margin (%) Operational profit margin (%) Revenue / cost ratio Revenue per $1,000 labour cost Net income per Load Tonne – Km $0. 001 343. 2 (2,145) (423. 0) (95. 0) (1,762) (1,027) (206. 1) 84. 2 (138. 2) 212. 3 6. 68 —— —— —— —— —— —— 2. 16 —— 4. 08 10. 4 —— —— 0. 016 —— —— —— 2. 73 —— 6. 83 1. 12 5,310 0. 81 2,279 0. 92 2,499 1. 02 2,969 0. 88 2,361 0. 93 2,266 0. 99 3,581 1. 03 3,989 0. 9 3,739 1. 07 3,995 2. 73 (10. 53) (3. 06) (1. 02) (8. 64) (6. 27) (1. 55) 1. 03 (1. 35) 2. 54 Table 1 Singapore Airlines’ performance relative to competitors Sources: Annual Reports for the airlines’ most recent financial year. IATA World Air Transport Statistics 2001; www. exchangerate. com (past rates based on respective report dates). 34 Business Strategy Review Spring 2004 G Volume 15 Issue 1 Cost-effective service excellence: lessons from Singapore Airlines Cost Effective Service Excellence Ingrained profit consciousness Rigorous service design Figure 1The five pillars supporting SIA’s cost-effective service excellence SIA has a service development department that hones and tests any change before it is introduced. This department undertakes research, trials, time and motion studies, mockups, assessing customer reaction – whatever is necessary to ensure that a service innovation is supported by the right procedures. Underpinning continuous innovation and development is a culture that accepts change as a way of life. A trial that fails or an implemented innovation that is removed after a few months are not seen as problems.In some organisations personal reputations can be at stake and so pilot tests â€Å"have to work†. At SIA a failed pilot test damages no-one’s reputation. In some organisations, service, and indeed product, innovations live beyond their useful years because of political pressure or lack of investment resources. SIA expects that any innovation is likely to have a short shelf life. The airline recognises that to sustain its differentiation it must maintain continuous improvement and be able to kill programmes or services that no longer provide competitive differentiation.According to Yap Kim Wah, senior vice-president, product and service: â€Å"It is getting more and more difficult to differentiate ourselves because every airline is doing the same thing†¦the crucial fact is that we continue to say that we want to improve. That we have the will to do so. And that every time we reach a goal, we always say that [we’ve] Cost-effective service excellence: lessons from Singapore Airlines got to find a new mountain or hill to climb†¦you must be able to give up what you love†. Customers as well as competitors raise the stakes for SIA.A company with a high reputation attracts customers wi th high expectations. SIA’s research team has found that SIA draws a disproportionately large number of very demanding customers. â€Å"Customers adjust their expectations according to the brand image. When you fly on a good brand, like SIA, your expectations are already sky-high. And if SIA gives anything that is just OK, it is just not good enough,† says Sim Kay Wee, senior vice-president, cabin crew SIA treats this as a fundamental resource for innovative ideas. Weak signals are amplified.Not only written comments but also verbal comments to the crew are taken seriously and reported back to the relevant sections of the airline. An additional source of intelligence is SIA’s â€Å"spy flights†, where advisors travel with competitors and report on their offerings. Finally, SIA recognises that its competition does not just come from within the industry. As a rule, SIA sets its sights high and instead of aiming to be the best airline its intention is to be the best service organisation. To achieve that, SIA employs broad benchmarking not just against its main competitors but against the best service companies.Spring 2004 G Volume 15 Issue 1 Business Strategy Review 35 Holistic staff development Total innovation Strategic synergies NewsCast High flying: but also ‘outstanding service on the ground’ â€Å"It is important to realise that [our customers] are not just comparing SIA with other airlines. They are comparing us against many industries, and on many factors. So when they pick up a phone and call up our reservations, for example, they are actually making a mental comparison, maybe subconsciously, to the last best experience they had.It could be a hotel; it could be to a car rental company,† says senior vice-president, product and service, Yap Kim Wah. â€Å"If they had a very good experience with the hotel or car rental company and if the next call they make is to SIA, they will subconsciously make the compari son and say ‘How come you’re not as good as them? ’ They do not say ‘You have the best telephone service system out of all the other airlines I’ve called’. Being excellent, our customers, albeit subconsciously, will benchmark us against the best in almost everything. Total innovation: integrating incremental development with unanticipated, discontinuous innovations An airline has a multitude of sub systems, such as reservations, catering, maintenance, in-flight services and entertainment systems. SIA does not aim to be a lot better but just a bit better in every one of them than its competitors. This means constant innovation but also total innovation in everything, all the time. Importantly, this also supports the notion of cost effectiveness.Continuous incremental development comes at a low cost but delivers that necessary margin of value to the customer. â€Å"It is the totality that counts. This also means that it does not need to be too expensive. If you want to provide the best food you might decide to serve lobster on short haul flights between Singapore and Bangkok, for example; however, you might go bankrupt. The point is that, on that 36 route, we just have to be better than our competitors in everything we do. Just a little bit better in everything.This allows us to make a small profit from the flight to enable us to innovate without pricing ourselves out of the market,† says Yap Kim Wah. While cost-effective, incremental improvements are an important basis for its competitive advantage, SIA also implements frequent major initiatives that are firsts in its industry, both on the ground and in the air. One example is its â€Å"Outstanding service on the ground† programme. This initiative involved working with the many other organisations that impact on customer service before and after a flight to ensure a seamless, efficient and caring service.SIA’s latest service excellence initiative, cal led â€Å"Transforming customer service† (TCS), involves staff in five key operational areas – cabin crew, engineering, ground services, flight operations and sales support. The programme is about building team spirit among staff in key operational areas aimed at ensuring that the whole journey from the purchase of the ticket onwards is as pleasant and seamless as possible. SIA employs an innovation approach called the â€Å"40-30-30 rule†. It focuses 40 per cent of the resources on training, 30 per cent on the review of process and procedures, and 30 per cent on creating new product and service ideas.In addition to continuous incremental innovations, SIA’s reputation as a service innovator is also based on unanticipated, discontinuous innovations in the air. Examples of current innovations include the full-size â€Å"space-bed† and on-board email and Internet services in business and first class. In addition, SIA has made the strategic choice to C ost-effective service excellence: lessons from Singapore Airlines Business Strategy Review Spring 2004 G Volume 15 Issue 1 be a leader and follower at the same time. It is a pioneer on innovations that have high impact on customer service (for example in-flight entertainment, beds and on-board email).However, it is also a fast follower in areas that are less visible from the customer’s point of view. In doing so, SIA relies on proven technology that can be implemented swiftly and cost-effectively. For example, SIA’s revenue management and customer relationship management (CRM) systems use proven technology where its partners had the experience to ensure a smooth and costeffective implementation rather than going for the latest technology, which would not only be much more expensive but also carry a higher implementation risk.Profit-consciousness ingrained in all employees Though SIA is focused on the customer and providing continually improving service, managers and st aff are well aware of the need for profit and cost-effectiveness. All staff are able to deal with the potentially conflicting objectives of excellence and profit. This is created by a cost and profit consciousness. â€Å"It’s drilled into us from the day we start working for SIA that if we don’t make money, we’ll be closed down. Singapore doesn’t need a national airline.Second, the company has made a very important visionary statement that â€Å"We don’t want to be the largest company. We want to be the most profitable†. That’s very powerful,† says senior vice-president Yap Kim Wah. Performance related reward system Team concept Peer pressure to perform Ingrained profit consciousness Related diversification High profitability Cost Effective Total innovation Service Excellence Strategic synergies Competitive intelligence, spy flights Extensive feedback mechanism Benchmarking against best-in-class Holistic staff development Suppo rting infrastructure Rigorous service designDemanding customers Developing the Singapore girl Figure 2 Singapore Airlines’ self-reinforcing activity system for developing cost-effective service excellence. Cost-effective service excellence: lessons from Singapore Airlines Spring 2004 G Volume 15 Issue 1 Business Strategy Review 37 As a result, any proposed innovation is analysed very carefully on the balance of expected customer benefits versus costs. Station managers and frontline staff constantly trade-off passenger satisfaction versus cost effectiveness – the customer has to be delighted but in a costeffective manner.Second, and like many service organisations, SIA has a rewards system that pays bonuses according to the profitability of the company. The same formula is used throughout the company. As a result there is a lot of informal peer pressure from individuals within the organisation; staff and managers appear quite open in challenging any decisions or actions if they see resources being wasted or money being inappropriately spent. SIA builds team spirit within its 6,600 crew members through its â€Å"team concept†, where small teams of 13 crew members are formed and then fly together as far as possible for at least two years.This leads to the development of team spirit and social bonds within the team that reinforces the culture of cost-effective service excellence and the peer pressure to deliver SIA’s promise to customers. Developing staff holistically Senior managers say that â€Å"training in SIA is almost next to godliness†. Everyone, no matter how senior, has a training and development plan. New stewardesses undergo training for four months, longer than any other airline. This includes not only functional skills but also soft skills including personal interaction, personal poise and the emotional skills involved in dealing with demanding passengers.In addition to training, SIA also encourages and supports acti vities that might on the surface be seen as having nothing to do with service in the air. Crew employees have created groups such as the â€Å"Performing Arts Circle†, staging full-length plays and musicals, the â€Å"Wine Appreciation Group† and the â€Å"Gourmet Circle†. These activities help to develop camaraderie and team spirit as well as personal knowledge of the finer things in life, which feeds into the service the crew delivers in the air. Achieving strategic synergies through related diversification and world-class infrastructure SIA uses â€Å"related diversification† to achieve ost synergies and at the same time control quality and enable transfer of learning. Subsidiaries serve not only as the development ground for management skills and a corporate rather than a divisional outlook through job rotation but also as sources of learning. In addition, related operations (such as catering, aircraft maintenance, airport management) have healthier p rofit margins than 38 the airline business itself because competitive intensity is lower and the industry structure is more favourable.SIA Engineering, for example, ensures that SIA does not pay expensive aircraft maintenance fees to other airlines; rather, it sells such services to other airlines at healthy margins. SIA’s fleet, the youngest in the world, ensures low maintenance costs, low fuel expenses and high flight quality. SIA’s Inflight Catering Centre produces SIA’s own inflight cuisine, ensuring high quality, reliability and responsiveness to customer feedback, but also caters for other airlines at a healthy margin. SIA’s SATS Group subsidiary manages Changi Airport, which is regularly voted the best airport in the world.This airport management and infrastructure entices passengers who are travelling on to Australia, New Zealand or other countries in the region to pass through Changi and to choose SIA as their carrier. SIA’s subsidiaries o perate under the same management philosophy and culture that emphasises cost-effective service excellence. Even though they are part of the group, they are quoted separately on the Singapore Stock Exchange and are subject to market discipline with clear profit and loss expectations. In SIA the conventional wisdom of outsourcing (outsource â€Å"peripheral† activities and focus on what you do best) does not apply.External suppliers would not be able to offer the value that SIA’s own subsidiaries can offer it. This kind of related diversification within SIA leads to strategic synergy in terms of reliability of key inputs, high quality, transfer of learning and cost effectiveness. Loizos Heracleous ([email  protected] edu. sg) is associate professor of strategic management at the National University of Singapore. Jochen Wirtz ([email  protected] edu. s g) is associate professor of marketing, director of the APEX-MBA (Asia-Pacific Executive MBA) Program, codirector of the UCLA-NUSEMBA Program, and a member of the management committee of the NUS Business School, National University of Singapore. Robert Johnston (bob. [email  protected] wick. ac. uk) is professor of operations management at Warwick Business School. Bringing it all together: building a self-reinforcing activity system How, specifically, do these elements lead to costeffective service excellence? The five pillars of SIA’s cost-effective service excellence are made real through a self-reinforcing activity system of virtuous circles (see Figure 2). The cultural values of cost-effective service excellence are more than just abstract ideas.They are ingrained into the minds of both employees and organisational processes. This may help to explain why SIA’s competitive advantage has been sustained for so long. While it is easy to copy single elements, it is much harder to reproduce an entire, self-reinforcing system. I Resources: Porter M. , Competitive Advantage, Free Press , New York, 1985 Shostack G. L. , Designing services that deliver, Harvard Business Review, vol 62, no 1, JanuaryFebruary 1984 Cost-effective service excellence: lessons from Singapore Airlines Business Strategy Review Spring 2004 G Volume 15 Issue 1