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The Kerala High Court on Monday directed the two public sector oil companies to sell high speed diesel to the State Water Transport Department at subsidised rates.
The interim directive comes close on the heels of a similar directive for supplying subsidised diesel to KSRTC.
Justice V.Chitambaresh issued the directive on a petition moved by the government department.
The State government gave an undertaking that it would pay up the differences in the prices of diesel to the oil companies if the writ petition was ultimately dismissed.
In its petition, the Transport Department said that it was not operating its boat service with the sole motive of making profit. It aimed to provide maximum service to the general public.
The oil companies were supplying diesel at non-subsidised rate, as the department had been categorised as a bulk consumer. The average consumption of diesel a month was 1.80 lakes litres. This entailed an additional expense of more than Rs 20 lakh a month.
The department was operating 733 numbers of services a day using 58 boats. A total of 60,000 commuters were dependent on its service. The department was forced to bear an additional burden on account of buying diesel at enhanced price, even as it was incurring a loss of Rs 26 crore a year. Therefore, the department was entitled to diesel at the subsidised price.
The petitioner sought to quash the Centre’s order directing the oil companies to sell diesel to bulk consumers at non-subsidized price.
Indian Oil Corporation and Hindustan Petroleum Corporation contended that while the Centre and the public sector oil companies were providing a subsidy of Rs 11.20 per litre of diesel, the State Government was levying tax to the tune of 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 enabled it to generate incremental revenue in the wake of the hike in the basic selling price of diesel meant for bulk consumer.
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