Patna, May 19: A 10 per cent surcharge on value-added tax (VAT) on petrol came as a bolt from the blue for thousands of consumers.

Oil companies raised petrol prices by Rs 1.76 to Rs 68.94 a litre from midnight on Saturday.

On May 7, while imposing a 10 per cent surcharge on petrol on the existing VAT rate of 24.5 per cent, deputy chief minister Sushil Kumar Modi had emphasised that it would not be passed on to the consumer. But oil companies said they operate on a margin of Rs 1.20 per litre and it was essential that they make up the surcharge imposed upon them. Now that petrol prices have gone up, the government is keeping quiet on the issue.

Modi could not be contacted in spite of several attempts.

Even more embarrassing for the government is the fact that the 10 per cent surcharge comes after oil companies announced a cut of Rs 3 in petrol prices across the country earlier this month. “According to law, surcharge cannot be passed on to the consumer. Sellers have to cover it from their profits. But they have recovered the amount by raising basic oil prices,” said a commercial tax department official.

The state sells around 5.5 lakh kilolitres of petrol annually.

In 2009, when petrol prices witnessed steep hikes, the NDA government had cut VAT down from 27 to 24.5 per cent. “With the imposition of 10 per cent surcharge on petrol, the actual tax on petrol is back to almost 27 per cent,” said an oil company official, stressing that at Rs 68.04 a litre the cost of petrol is highest in eastern India, except Bengal.

The Bihar government makes political noises whenever oil companies hike prices of petroleum products but the fact remains that it gains in terms of VAT collection every time there is a hike. The state’s VAT collection on petro products has risen from Rs 1,213 crore in 2007-08 to Rs 2,528 crore in 2011-12. In fact, petroleum products account for almost 30 per cent of the commercial tax collected in Bihar.

Oil companies said that apart from the profit at petrol outlets, the other components in petrol pricing are VAT, entry tax and now surcharge. “The profit earned by the state government for sale of every litre of petrol is over Rs 18,” said an oil company official.

He pointed out that Bihar not only levied entry tax on petrol entering the state, but also on crude oil (at 10 percent of crude oil prices) entering through the Haldia-Barauni pipeline at Barauni.

RJD MP Ram Kripal Yadav held both the central and state governments responsible for the hike.