Petrol under GST would cost Rs 38; Pradhan says it's only way to reduce price


Daijiworld Media Network

New Delhi, Sep 15: With petroleum prices having touched the three year high, Petroleum Minister Dharmendra Pradhan has in a tweet said, "The Petroleum products' inclusion in Goods and Services Tax (GST) only way for rational fuel prices".

If Finance Minister Arun Jaitlely-headed GST Council takes Pradhan’s suggestion, petrol prices under 12 per cent GST bracket would be as cheap as Rs 38.1 in Delhi as against the current Rs 70.38. If government opts for 18 per cent, petrol price will come down at Rs 40.05 a litre. If the government pushes petrol to highest GST tax bracket of 28 per cent, then it will cost Rs 43.44 per litre in the national capital.

Similarly, if government brings diesel prices under 12 per cent GST bracket, then it will be sold at Rs 36.65 in Delhi. At 18 per cent GST, diesel will cost Rs 38.61 while at 28 per cent GST, it will cost Rs 48.88.

Currently, petroleum products are still governed by VAT system. Different states have different rates of VAT applicable on petroleum products.

The government had between November 2014 and January 2016 raised excise duty on petrol and diesel on nine occasions to take away gains arising from plummeting international oil prices. In all, duty on petrol was hiked by Rs 11.77 per litre and that on diesel by 13.47 a litre.

It was August 2014, when petrol prices breached Rs 70 mark the last time. Back then the crude oil prices was around USD 98 per barrel. But, now the crude oil prices are hovering around USD 50 per barrel.

According to data released by the Indian Oil Corporation, fuel costs only Rs 26.65 at the refineries, which it later sold to dealers at Rs 29.96. The dealer charges Rs 3.24 as commission. That makes the total cost of fuel Rs 33.20. However, the data showed that government levied excise duty of Rs 21.48 and VAT Rs 14.76 which made the total price of petrol for consumers Rs 69.43 in Delhi on September 2.

The decision to bring petroleum products under the new taxation regime can only be taken by the GST Council. However, the council has heavy representation from states. If GST council does include petroleum in GST brackets, then they could be at loggerheads with the state government.

  

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Comment on this article

  • AnoNymouS, Mangalore

    Mon, Sep 18 2017

    No.. There is no limit it seems :)

    DisAgree Agree Reply Report Abuse

  • chris, Mumbai

    Sat, Sep 16 2017

    So why the Petroleum Minister Dharmendra Pradhan has in a tweet said, Petrol under GST would cost Rs 38; Pradhan says it's only way to reduce price .

    So why he is giving this statement cant he tell his minister the finance minister to get this under GST bracket. Even he know that the Feku and all his team are just fooling common man

    DisAgree [2] Agree [21] Reply Report Abuse

  • Lamert, Mangalore

    Sat, Sep 16 2017

    We are electing the wrong people to both center and state. In between people who have money or support of buisnesshouses, media groups who want gains for some pain are the one who get elected by the first mentioned. Indirect members through Rajya Sabha are given plum posts such as Finance, Defense...list goes on. Public never wanted persons to rule indirectly.

    DisAgree [2] Agree [8] Reply Report Abuse

  • Shrinivas, Udupi/Sharjah

    Sat, Sep 16 2017

    All the state government should agree. Now all the states against GST in this regards.

    DisAgree [1] Agree [4] Reply Report Abuse

  • Stan, Udupi

    Sat, Sep 16 2017

    Pl understand that governments needs money to pay for high salaries to government staff, the rulers, ministers, MP's & MLA's, regular DA increases, for their facilities & comforts, and for their frequent foreign trips. So the easiest way is to charge substantial taxes to common citizens on mass consumption items, including sanitary napkins!
    After all the taxes are fixed by the bureaucrats in consultation with ruling establishment.
    What power do we, the common people, have in these issues, other that vote for some candidate during election time, believing their promises which later on stated as just jumlas?

    DisAgree [1] Agree [12] Reply Report Abuse

  • G R PRABHUJI, Mangalore

    Sat, Sep 16 2017

    I think it is for half litre.

    DisAgree [6] Agree [10] Reply Report Abuse

  • Jamal, Mangalore/Abudhabi

    Sat, Sep 16 2017

    There is a limit to fool general public

    DisAgree [7] Agree [24] Reply Report Abuse

  • Ahmed, Bangalore

    Sat, Sep 16 2017

    Tax
    Central Tax: Rs.21.48
    VAT and Cess in Delhi: Rs.14.96
    Total is Rs.36.44 is Tax amount per litre.

    So the tax collected is 107% per Litre of Petrol in Delhi. In Mumbai, the petrol price is Rs.79.48, so the tax goes up to 120% to 140%.

    It indicates, what we purchase 1 litre of petrol, not even half goes to Petroleum companies. More than half goes to Government as tax.


    Now further we calculate how a Refinery comes up with a base value price. i.e Rs.26.65 as on 14th September 2017. Refinery ko Rs.26.65 kaise tay hote hai

    Trade parity price
    Import Parity Price is 80%
    Export Parity Price is 20%

    Import Parity Price means, importing Petrol using fictitious/imaginary (kalpanik) price. Read it carefully it is fictitious price not real.

    Why Fictitious Price?
    India don’t import Petrol, but only exports Petrol. We are talking about Petrol, not Crude oil. From crude oil the petrol, diesel, tar etc. are refined. Petrol is not imported to India only crude oil is imported. As Petrol is refined locally in India, hence it's a fictitious (kalpanik) rate. We have not imported the petrol, but still the Petroleum companies calculate the fictitious price of refined petrol and fix the base value of it.

    How Import Parity Price calculated using fictitious/imaginary value?
    i) Rate/Price calculated for delivering at International Port such as Saudi Arabia port (International Port mein petrol delivery karne ka rate) +
    ii) Fictitious price of transporting Petrol from International port to India via ship. (Ship mein India laane ka kalpanik qharch) +
    iii) Insurance and Port charges fictitious rate (insurance aur port charge ka kalpanik qharch) +
    iv) 2.5% fictitious custom duty

    DisAgree [1] Agree [15] Reply Report Abuse

  • Ahmed, Bangalore

    Sat, Sep 16 2017

    Today's import basket (crude oil purchased on today's rate) and today's exchange value of dollar, which is Rs.64 per Dollar as on 14th September 2017. Hence
    If crude oil is $30 per barrel, the petrol Refinery should get Rs.13.44
    If crude oil is $50 per barrel, the petrol Refinery should get Rs.22.33

    So today’s crude oil is $52.36, the petrol Refinery should get Rs.23.35, but they are charging Rs.26.65.
    The Refineries are collecting Rs.3 extra from you and me per litre of Petrol. Apart from the above extra charge, we have taxes, dividends etc added to it, which turns Petrol very expensive in India compared to other countries.

    Unfortunately a common man doesn’t understand or doesn’t wish to understand the actual math behind the high petrol price and just watch as a mute spectator.
    Increase in the rate of Petrol/Diesel/LPG is not just the increase in the rate of these products alone. The repercussion of increase in petrol/Diesel/LPG indirectly leads to increase in almost all commodity prices. Ultimately poor man’s life is a hell.

    DisAgree [1] Agree [11] Reply Report Abuse

  • Ahmed, Bangalore

    Sat, Sep 16 2017

    To understand the Import Parity Price, let’s take an example of Coca Cola 500 ml. If you purchase it from London, it will cost you Rs.110 and if you purchase locally in India it is just Rs.35.
    So now, if you want to sell Coca Cola with Import Parity Price from London, then what would be price of 500 ml Coca Cola falls?
    Rs.110 + customs duty + shipping transportation price etc. which will turn up to Rs.170.
    So what we get in India for Rs.35 and in London for Rs.110, suppose if we add Import Parity Price it will cost around Rs.150.

    So the question is, should we have Import Parity Price on Petrol, when we ourselves refine the petrol in our Refinery companies?

    In 2010 is was explained to Parliamentary committee that approximately $2 per barrel is the expenses for refining. 80% cost of petrol is of crude oil & remaining 20% are other costs. I.e. if crude price increases, your 80% is impacted, and if crude price decreases the same 80% is impacted. Unfortunately this was not debated.

    Now you might ask, if the expense were $2 in 2010, now it might have increased upto $10.
    In 2016 Indian Oil Corporation Limited (IONL), whose total expenses (Kharcha) have reduced to -3% and profit increased to +58%. The profit of India Oil Company in the year 2016-2017 is Rs.17,242 crores.

    You must have heard hue and cry in our country, that there is a lot subsidies provided, oil marketing companies are going in loss, petrol price should increase else it will be decontrolled etc. Which decontrol they talk about, which subsidies they talk about, when the profit is 17,242 crores?

    Each year Government takes dividends from petrol company (sarkar ko har saal petrol companies se milte hai Rs.8000 se Rs.10,000 crore) . Last year it took dividends of Rs.8000 to Rs.10000 crores.

    Now you might ask, if you don't take Import Parity Price, is there any other way out?
    Government committee itself had provided a formula which is as follows:

    DisAgree [1] Agree [9] Reply Report Abuse

  • Ahmed, Bangalore

    Sat, Sep 16 2017

    Why is Petrol too expensive in India?
    In the last 3 years the crude oil prices have fallen drastically. After Modi Government took over its charge, the crude oil price has fallen upto 53% , but yet the prices of petrol is soaring high and reached its highest level since 2014 on Thursday 14th September 2017.

    As on 14th September 2017, the Petrol prices at Metro cities are as follows:
    Delhi 70.38, Mumbai 79.48, Kolkata 73.12, &Chennai 72.95.

    About Petrol
    Crude oil is exported from Arab countries, Russia, USA etc. It is shipped to India and reaches Petroleum Refinery companies. In Refineries, the crude oil is turned into Petrol, Diesel, Kerosene, LPG, Paraffin wax (which is white petroleum Jelly used in Vaseline, Makeup items), coal-tar, & naphtha.

    How the Petrol Price Fixed in India
    Note: The below calculation is based on the Petrol Price of Delhi which is Rs. 70.38 as on 14th September 2017.

    First let’s calculate the rate of ‘Refinery Transfer Price’ (Refinery ko kitna paisa milta hai).
    Indian Oil Corporation Limited (IONL) is the largest Petroleum Marketer in India, and has its own Refinery establishment. Rs. 26.65 is the base price as on 14th September 2017, which IONL provides to its Refinery wing.

    Purchasing from Refinery: Rs.26.65
    Marketing margin & expenses (including Transportation): Rs.4.05
    Central Tax: Rs.21.48
    --------------------------------------------------------------------------------
    Dealer Paying the Amount to Refinery Companies: Rs.52.18
    Dealer’s commission: Rs.3.24
    VAT and Cess in Delhi: Rs.14.96
    ----------------------------------------------------------------------------------
    Total is Rs.70.38 for petrol per liter in Delhi





    Now let’s segregate the above calculations into as ‘Expenses’, and ‘Tax’ and witness the difference.

    Expenses (Kharcha)
    Purchasing from Refinery: Rs.26.65
    Marketing margin & expenses (including Transportation): Rs.4.05
    Dealer’s Commission: Rs.3.24
    Total is Rs.33.94 actual petrol cost per litre.

    DisAgree [2] Agree [8] Reply Report Abuse

  • ibrahim, ksa/yanbu

    Sat, Sep 16 2017

    Yes of course, it can be general ppl hand reaching if GST charged.

    But govt doesn't have ichasakthi to help common Men know.

    DisAgree [3] Agree [5] Reply Report Abuse

  • Af,,, Mangalore

    Sat, Sep 16 2017

    GST will be implemented on petrol on the year end 3017, fakuism has a limit.

    DisAgree [2] Agree [10] Reply Report Abuse

  • AMAR NATHAL, MANGALORE

    Sat, Sep 16 2017

    Sad to notice how these politicians mislead the public. Who is at the Centre now? BJP minister is speaking as if some other party is ruling at the Centre. Why can't he introduce GST for Petrolium products if it can bring down the price? If Congress had done this you could tell the people that if BJP comes to power price will come down and surplus 15 lakhs for each person. What happened even after more than three years in power? Prices keep going up. May be cows are safer.

    DisAgree [3] Agree [12] Reply Report Abuse

  • Kiran D Souza, Mangalore

    Sat, Sep 16 2017

    If still VAT continued then what was the reason to celebrate when GST introduced.
    They say "One India One Tax", but at present "One India Many Taxes" like CGST, SGST, SERVICE TAX, VAT, etc.. Etc...
    Just strip off all the corrupts of their Properties all over the country, no need for tax system at all. Do this work first & make India Tax Free.
    Get rid of this faltu system called democracy, let the Supreme Court make appointments for Ministries to central & states on merit basis, let there be transparency & accountability.

    When the Gulf countries can give tax free why not we?

    They have only & only oil, but we have all the resources & access to everything, but still taxing heavily...
    When you are under Democracy and Religion, you can't live peacefully, both are milking agents of your earnings.
    I think there is no leader or party to be believed or trusted in this Country.
    All are fooling people in one or the other way.
    I realized this when a mass civil movement called " India Against Corruption" made us directionless, if that movement was there today, we would have made government to nail down in front of the people. That movement had the capability to do any changes in the system since it has united all people irrespective of Parties.

    DisAgree [2] Agree [16] Reply Report Abuse

  • Joseph F. Gonsalves, Bannur, Puttur / Mangalore

    Sat, Sep 16 2017

    Where is SushzzzzzzzzzzzzzzzzzzzzzzzzzMa.

    SHE CANNOT MAKE BHARATH BHANDH NOW FOR INCREASING PETROL PRICES ON DAILY BASIS.

    MAKING THREE COOKING GAS CYLINDERS THEY PROTESTED ON THE ROADS PREPARING CHAAI AND DISTRIBUTING TO BJP MEN IN MANGALORE.

    NOW THERE IS NO SUBSIDY AT ALL FOR COOKING GAS.

    WHERE ARE ALL BIG MOUTHS.

    POOR AND MIDDLE CLASS ARE SUFFERING LIKE ANYTHING IN THE TUGLAQ RAAJ

    PRACHAN IS A BATCHHA.
    WHERE ARE BJP MAHILA MORCHA.
    CENTRAL IS LIVING IN PUBLICS KURCHA.

    DisAgree [3] Agree [25] Reply Report Abuse

  • Praveen, Udupi

    Sat, Sep 16 2017

    What did the Modi do with the Rs 50 Tax collected on every litre of petrol and diesel for the last three years. It is the biggest scam by Modi and BJP.

    DisAgree [4] Agree [28] Reply Report Abuse

  • Pinto, BLR

    Sat, Sep 16 2017

    Never trust these guys !!! Not even for a second.

    All Indians know the oil price loot happening since 2014. Despite crude oil coming below USD 30 per barrel, Indians never got that benefit.

    Even when crude oil price went to above USD 147 being highest in history, congress government never allowed people to suffer. What this government did even when crude price was below USD 27 in February 2016 ??? All Indians know.

    Reliance never used to retail fuel in India & to railways before. Now they supply to railways & domestic pumps !!! Why should government allow them now ? Who is nationalist ? Now reliance can't sell oil outside because there is abundant oil & nobody wants their oil. Only Indians are forced buy from them.

    I think best solution is all states should import processed oil directly from international market & retail in their respective state. Then only this oil price loot in India currently happening will come to an end. The government & their agents of loot, the current oil marketing companies should go out of business in oil sector. They looted people of India enough. Even our neighbouring poor countries than India have lesser rates for fuel.

    Bring oil under essential commodities act and remove all taxes. After all fuel is required for every citizens mobility.

    Remember service tax under UPA was 12.36% including surcharge. Now it has gone to 28% (few cases 18%) after GST. Can you believe the loot happening ?

    Even shaving creams the daily necessity of life you are paying 28% GST !!!

    DisAgree [3] Agree [15] Reply Report Abuse

  • Sandesh, Mangalore, Oman

    Sat, Sep 16 2017

    IT IS LIKE 15 LACS RUPEES PLAN.

    DisAgree [4] Agree [18] Reply Report Abuse

  • Valerian Dsouza, Udupi/Mumbai

    Sat, Sep 16 2017

    When GST collections have already surpassed the expectations, it's high time to merge all the following under GST and allow seamless credit. Only then it's one nation, one tax!

    1. Crude Oil ( Petrol, diesel & Kerosene)
    2. Liquor
    3. Stamp duty on immovable property
    4. Professional Tax
    5. Shops & Estt Act Fees.
    6. Property Tax collected by Tahasildar / Municipalities
    7. RTO Tax
    8. Passport Fees
    9. Charges of Registrar of Companies/Firms etc.
    10. Custom duty

    DisAgree [2] Agree [14] Reply Report Abuse

  • Peter, Bangalore

    Sat, Sep 16 2017

    if GST applied to Petrol and Diesel, GDP decline further and fekunomics fail.

    DisAgree [7] Agree [12] Reply Report Abuse

  • PAM Suvarna, karla

    Sat, Sep 16 2017

    Good suggestion,but try to implement it asap,then only the true meaning for "Acche din will come to play"

    DisAgree [3] Agree [17] Reply Report Abuse

  • sharan, Mangalore

    Sat, Sep 16 2017

    Finally an admission by an ardent Namo/ BJP fan that " achhe din" arent here yet.Keep it up..admit the ground reality 😅👌

    DisAgree [1] Agree [9] Reply Report Abuse

  • Naveen, kulshekar Mangalore

    Sat, Sep 16 2017

    A very good suggestion! implement right away. it helps everyone .

    DisAgree [2] Agree [8] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Sat, Sep 16 2017

    Petroleum Minister Dharmendra Pradhan's days are numbered ...

    DisAgree [5] Agree [28] Reply Report Abuse

  • Langoolacharya., Belman/Wash DC.

    Sat, Sep 16 2017

    People,

    12 per cent GST for Petrol and Diesel is fair a tax and Rs 38 per Liter for Petrol is a fair price(US retail price).

    From time immemorial we are taxing heavily on Petroleum products, Tobacco products and Alcohol.....this is not fair...

    India's main problem, rich people not paying taxes and industrialists collecting taxes from people for petroleum products and not depositing it to State treasuries...pocketing it and sharing spoils with corrupt politicians....

    Unless we break this unholy nexus India will never improve....We will become a developed country only if all pay fair taxes and taxes remain low...

    Acharya Chankya said..." Taxes should be collected painlessly like bees collect honey....not mad and hungry dog taking a bite of passerby....

    Our country will never improve unless everybody think this is their country and if anybody steals tax money...its their personal money which is being stolen...

    ...JH...

    DisAgree [2] Agree [16] Reply Report Abuse

  • J.F.D SOUZA, Attavar, Mangalore

    Sat, Sep 16 2017

    Better to have and run vehicles with solar power.

    DisAgree [1] Agree [9] Reply Report Abuse

  • Praveen s, Permannur

    Sat, Sep 16 2017

    Its fake that govt saying now India only one tax is their that gst..one nation one tax.your majority govt is their implementing thing 1 st than talk with media.... Foolishness limit is their

    DisAgree [1] Agree [4] Reply Report Abuse

  • sri_elder, Karkala

    Sat, Sep 16 2017

    Government pays salary to its employees through these high fuel taxes...

    DisAgree [11] Agree [3] Reply Report Abuse

  • Joseph F. Gonsalves, Bannur, Puttur / Mangalore

    Sat, Sep 16 2017

    Dear sri_elder, Karkala,

    Haam, haam ...

    We the citizens thought politicians are paying from their pockets to government employees salaries???!!!

    DisAgree [1] Agree [12] Reply Report Abuse

  • Jenifer, Mangalore

    Sat, Sep 16 2017

    Sri, You may be right. And, the government doubled the ministers' salary because the taxed amount (on such products) is lying there idle ! The money needs to be consumed - you see ?

    DisAgree [1] Agree [9] Reply Report Abuse

  • Joseph Britto, BANGALORE

    Sat, Sep 16 2017

    Petrol under GST would indeed be a Great loss to the ruling selfish Govt.

    DisAgree [2] Agree [13] Reply Report Abuse

  • Vishnu, Bangalore

    Sat, Sep 16 2017

    There should be Bharath Bandh to bring down petrol prices. What is the useless opposition doing? Why are they sleeping?

    DisAgree [3] Agree [9] Reply Report Abuse

  • DON, Udupi

    Sat, Sep 16 2017

    Day light robbery by BJP and co. Where is the governance?
    If BJP comes to power again, just think that country is gone to dogs.

    DisAgree [12] Agree [43] Reply Report Abuse

  • JK, Udupi

    Sat, Sep 16 2017

    GST would be best option, otherwise Siddu and his team will play the VAT to their convenient People might be paying more for Petrol in Karnataka because of increase in VAT.

    DisAgree [29] Agree [16] Reply Report Abuse

  • Jenifer, Mangalore

    Sat, Sep 16 2017

    JK, If GST or VAT was a decision in state governments, would GST have been applicable in Karnataka ?

    Why you don't accept the fact that if petroleum products will be brought under GST, Modi's friend Ambani will get the scissors to his income ? Do Ambanis function from Siddu's territory ?

    DisAgree [2] Agree [11] Reply Report Abuse

  • Faizal, Qatar

    Sat, Sep 16 2017

    Ache din ..BJP ka baktho abi buktho

    DisAgree [14] Agree [36] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Sat, Sep 16 2017

    Ambani's will not allow petroleum products to come under GST ...

    DisAgree [11] Agree [51] Reply Report Abuse

  • Dilip, Mangalore

    Sat, Sep 16 2017

    If it does happen, it would be a nice move in favour of the common man.
    But unfortunately, as we all have been seeing, anything that makes life easier for the common man is nowadays almost next to impossible. Sigh.
    Only time will tell if we do get something to cheer about.

    DisAgree [4] Agree [17] Reply Report Abuse

  • jeevan, mangalore

    Sat, Sep 16 2017

    indians should pay more, if the barrel is high,, Govt needs money for the development. without money how can they develop how can they make smart city.

    don't forget our army mens are dying in Borders. Pay more and save the nation. at least bjp is using ur money for good cause.

    DisAgree [60] Agree [15] Reply Report Abuse

  • SJM, Mangalore

    Sat, Sep 16 2017

    What about Non Psyment of Oxygen and killed children's in your UP . Shame on you and your Govt. so far ZERO development under this Govt.

    DisAgree [3] Agree [17] Reply Report Abuse

  • Rajesh, Mangalore

    Sat, Sep 16 2017

    Government had given money to Hospital in gorakhpur and there was enough money to buy oxygen. yet the hospital did not pay the dues.

    DisAgree [2] Agree Reply Report Abuse

  • Harish Hegde, Mangalore/Aramco (Saudi Arabia)

    Sat, Sep 16 2017

    Govt needs money not for the development of Mangalore but to run bullet train from Gujarat to Mumbai or where ever there is BJP rule, Government need money to put up Shivaji's statute in Mumbai, Government need money for Kashmir, Government need money to buy MP's/MLA's and to pay their thugs etc.

    Jeevan why are you barking here, you should be joining them not just to preach others, it is something like lead by example.

    DisAgree [1] Agree [17] Reply Report Abuse

  • Praveen, Mangalore

    Sat, Sep 16 2017

    Then why did BJP opposed fuel price hike when UPA was ruling. Tum Kare to chamatkar , hum Kare to ?

    DisAgree Agree [13] Reply Report Abuse

  • NM, Mangalore

    Sat, Sep 16 2017

    Very easy to tell, impossibly difficult to implement.

    DisAgree [6] Agree [17] Reply Report Abuse

  • Anand, Mangalore

    Sat, Sep 16 2017

    A very good suggestion! implement right away

    DisAgree [4] Agree [25] Reply Report Abuse

  • S. Vijayan, Mangalore, Bangalore

    Sat, Sep 16 2017

    IT IS JUST FOR DREAMING, NOT TO IMPLEMENT. MORE THINGS WILL COME FOR POOR VOTERS FOR DREAMING.

    DisAgree [2] Agree [8] Reply Report Abuse

  • Oliver, permude

    Sat, Sep 16 2017

    Mr. Pradan,ur government is answerable to the privates....... such as Reliance and Essar etc.....
    So the fuel prices will never come in GST bracket as they have to their business but u guys will eventually blame the state government

    DisAgree [11] Agree [30] Reply Report Abuse


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Title: Petrol under GST would cost Rs 38; Pradhan says it's only way to reduce price



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