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Public sector oil companies today informed the Kerala High Court that the State Government can waive the VAT on diesel to reduce the financial burden on KSRTC.
The Indian Oil Corporation and Hindustan Petroleum Corporation submitted in the court that if the State government took a decision to waive VAT of Rs 11.20 a litre being imposed on the sale of diesel to the state transport undertaking, the financial burden of the Kerala Road Transport Corporation due to diesel price increase could be eased.
In a statement, the oil companies said the State government needed to take appropriate steps such as reduction of sale tax/Vat on the sale of diesel to ensure the financial health of its State transport utilities.
The statement was filed in response to a writ petition filed by the KSRTC seeking a directive to the oil companies to supply diesel at subsidised rates.
KSRTC said that as it had been categorised as bulk consumer, diesel was being supplied at non-subsidised price. The average daily consumption of diesel is 4 lakh litres. It is making a loss of Rs 18 core a month after it was brought under the bulk customer category.
Even private bus operators were getting subsidised diesel. The discrimination in the matter of supplies of diesel shown by the oil companies and the Centre was arbitrary and unfair, the petition said.
The companies said that while the Centre and the public sector oil companies were giving a subsidy of Rs 11.20 a litre, the State government was taxing almost the same amount on every litre of diesel being sold to bulk consumers.
In fact, the levy of ad valorem VAT rate of 20 per cent on diesel by the State government had resulted in incremental revenue for the government following the hike in the basic selling price of diesel for bulk consumer with effect from January 18, 2013.
It pointed out that around 17.77 per cent of the total diesel sale in the country was directly made to the bulk consumers, including the Railways and State transport utilities. It was to reduce the under-recovery of oil companies on the sale of diesel that the Cabinet Committee on Political Affairs decided to sell diesel at non-subsidised price.
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