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A Division Bench of the Kerala High Court on Monday directed the Central government and the GST Council to explain the reasons for not including petrol and diesel within the ambit of the GST.
The Bench led by Chief Justice S Manikumar passed the directive when a writ petition filed by the Kerala Pradesh Gandhi Darshanavedi, Thiruvananthapuram, challenged the GST Council’s decision not to include the petroleum products under the GST.
The petitioner pointed out that the GST Council meeting had recently decided that it was not appropriate to include petrol and diesel under the GST at this stage. The Council had met to consider a representation given by the petitioner seeking to bring the products under the GST following the High Court directive.
Economy’s ripple effect
The petitioner said that the Council had not given any proper reasons for rejecting the request of the petitioner. There was no application of mind by the Council. The present situation was ripe enough to decide as the prices of petrol and diesel were surging on a day-to-day basis, creating a ripple effect on the economy. In fact, the people who did not even consume petrol and diesel were also equally affected.
The petitioner pointed out that different prices were being charged for petrol and diesel in various States in the country due to different rates of tax levied by the State government. It impeded achieving harmonised national market as contemplated under Article 279A(6) of the Constitution. The rise in petroleum products had a cascading effect on all commodities including essential ones, leading to an increase in the cost of living. The prices of fuel need to be rationalised.
The Centre and the GST Council could not content if fuel included in the GST would have implications on the revenue collection. A constitutional duty was cast upon the GST Council to make a recommendation to include petrol and diesel under the GST regime. If it was brought under the GST, the maximum tax rate would be 28 per cent.
Though the oil companies had no choice but to fix the prices as per the global market rate for crude oil, the higher rate of tax levied by the Centre and the State government had caused a steep hike in the prices of the fuel. The petitioner sought to quash the decision of the GST Council and pleaded for a directive to include fuel within the scope of the GST.
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