Diesel VAT hike irks BJP, petroleum dealers alike - Saffron party says not consulted; dealers to protest on Nov 21

Tuesday, 18/11/2014

http://www.tribuneindia.com/2014/20141118/punjab.htm#9

Chandigarh : The Akali Dal-led Punjab Government’s decision to raise VAT on diesel by 1.5 per cent has not gone down well with its alliance partner BJP. The petroleum dealers as well as the consumers too are a miffed lot.

The VAT has been raised from 9.75 to 11.25 per cent. If the surcharge is included, the VAT comes out to be 12.3 per cent against 10 per cent earlier. The BJP leaders allege that they were not taken into confidence by the Akali Dal before increasing the VAT. The petroleum dealers in the state have threatened not to buy any diesel from the three oil marketing companies on Friday (November 21) as a mark of protest.

On Saturday, the Punjab Excise and Taxation Department had raised the VAT charged on diesel on the pretext that its rapidly falling prices had led to a loss of Rs 225 crore in VAT collection.

This is the second hike in VAT on diesel by the state government in just two months. The diesel retail price has fallen by Rs 5 per litre in this financial year.

JP Khanna, Punjab Petroleum Dealers Association president, said due to high VAT rate, the diesel in the state was costliest in the region. It sells from Rs 53.14 to Rs 53.16 a litre.

“The VAT charged in Punjab is the highest. Since other states have lower retail sale price of diesel, there is rapid diversion in sale of fuel. The people in the districts bordering Haryana, Himachal and Chandigarh have been buying cheaper fuel from the surrounding states. The measure to increase VAT collection is a short-term gain. It will have a long-term adverse effect on fuel retail sales in Punjab,” he said.

The Punjab BJP leadership, too, has expressed concern over the decision. State unit president Kamal Sharma said the Akalis had consulted them (in the joint coordination committee of the two parties) before increasing the VAT on diesel in October, but the alliance partner chose the other way round this time.

“I will take up the matter with the Akalis. We have been demanding that since the diesel prices have come down, the government should lower the bus fare, as per the new transport policy,” said Sharma.

Fuelling furore

The VAT has been raised by 1.5 per cent per litre, the rate up from 9.75 to 11.25 per cent

If the surcharge is included, the VAT comes out to be 12.3 per cent against 10 per cent earlier

The move would ensure the Punjab Government a gain of Rs 225 crore in VAT collection