Demand to include motor fuel in GST grows stronger with petrol pump strike

The demand to bring petrol and diesel under the ambit of Goods and Services Tax (GST) has got a booster dose with the petrol pump owners across India calling strike on October 13 in support of the demand.
Over 54,000 dealers across India have come together to form United Petroleum Front (UPF) which has announced the nationwide strike to press for various demands including better margins for dealers and inclusion of motor fuel into GST.In Karnataka, all 4,900 petrol pumps including 650 in Bengaluru will down shutters on Friday. The UPF has threatened that the dealers would stop purchase and operations from October 27, if their demands are not met.

Even truckers have supported the demand and they had called a two-day strike across India from Monday.”While the Centre is harping on its One-Nation-One-Tax policy, how come an essential commodity such as motor fuel has been kept out of the GST ambit? The inclusion of petrol and diesel into GST will solve many problems apart from making the fuel cheaper by over half of the present prices,” said M Prabhakar Reddy, core committee member of UPF and chairman of All-India Petrol Dealers’ Association (AIPDA).

He said while the Centre is dithering bringing petroleum products into the GST preview its move to slash excise duty by Rs. 2 litre is meagre as compared to fall of crude oil prices. He said reduction of the excise duty at least by Rs.7 a litre could commensurate the crude oil price that has fallen from $102 to $ 48 in these four years after the BJP came to power at the Centre. He said the state governments should also own up responsibility and reduce local sales tax on petrol and diesel.

Upward revision of dealer margin every six months (at present, the dealers get margin of Rs. 3.24 and Rs. 2.18 on a litre of petrol and diesel respectively), abolition of hefty penalty for violation of zero tolerance norm (the pump owners are liable to penalty up to Rs. 50,000 if difference is found in measurement even to the extent of one millilitre per litre of fuel), resolution of labourer issues and resolution issues related to ethanol blending (the dealers are opposing mixing of ethanol with motor fuel) are among other demands.

“The Centre’s latest policy regarding sales of petrol and diesel is draconian. Imagine paying penalty of Rs. 50,000 if petrol measures less by a millilitre when the tolerance should be allowed up to 10 ml considering the evaporation factor,” said A Tharanath, executive member of Bangalore Petroleum Dealers Association (BPDA).
As far as inclusion of petrol and diesel into GST is concerned, the Centre unlikely to take decision anytime soon, considering the possibility of revenue loss to be suffered by both the Centre and states. While tax on fuel sales is the major revenue for the Centre, it earned Rs. 2.42 lakh crore last year and it is expected to fall by 50 % if petrol and diesel under the GST ambit.

“There is no such proposal and inclusion of motor fuel into GST was not discussed in the GST council,” said Ritvik Ranjanam Pandey, commissioner of commercial taxes, who attended the GST Council meeting held on October 6.There is no possibility of the Karnataka state government reducing sales tax either. The state is incurring loss to the tune of Rs. 200 a month an account of abolition of 5 % entry tax after the GST rollout and the government is not willing to take hit further.”The Centre wants us to reduce sales tax by 5 %. The fact of the matter is that we have already reduced 5 % tax in terms of entry tax,” said ISN Prasad, additional chief secretary (finance).


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