On VAT warpath, fuel dealers threaten stir

High state taxes hurting diesel sales, especially in districts bordering Uttar Pradesh & Bengal

By Our Correspondent in Ranchi
  • Published 25.05.18
PRICEY DRIVE: A petrol bunk employee refuels a car in Ranchi on Thursday. Picture by Manob Chowdhary

Ranchi: Jharkhand Petroleum Dealers' Association on Thursday decided to hold a massive demonstration with thousands of oil tankers in Ranchi in June if the state government did not lower VAT on petrol and diesel that they claim is hurting their business.

In Jharkhand, the state government charges Rs 15 as VAT and Re 1 as cess on petrol per litre and 22 per cent as VAT and Re 1 as cess on diesel, which in all works out to fuel prices higher than in neighbouring Bengal and Uttar Pradesh. Diesel, the mainstay for long-distance transporters, cost around Rs 2 less per litre in Bengal and Rs 4 less per litre in Uttar Pradesh, so most transporters refuel from these states before entering Jharkhand, dealers have said.

On Thursday, petrol cost Rs 77.22 per litre and diesel Rs 72.35 in Jharkhand, showing a hike of 23 paise in petrol and 20 paise in diesel from Wednesday.

The dealers' announcement came a day after chief minister Raghubar Das told the media that the government was examining the feasibility of reducing existing VAT slabs on diesel and petrol.

But, president of the dealers' association Ashok Kumar Singh did not mince words.

"High VAT on diesel is our prime concern. Existing tax slabs on petrol in Jharkhand, Uttar Pradesh and Bengal are almost the same. But, VAT on diesel is very high in Jharkhand, 22 per cent, which directly hits sales. We've been pressing for a revision for two years now, but the government is buying time in the name of forming one committee after another. Last month, we submitted a memo to the chief secretary and commissioner of commercial tax department to reduce VAT on diesel. Now, our only option is to protest in Ranchi in June with thousands of oil tankers," he said.

He said as many as 529 pumps in nine districts sharing borders with Bengal and Uttar Pradesh - Sahebganj, Pakur, Dumka, Jamtara, Dhanbad, Bokaro, Hazaribagh, Garhwa and East Singhbhum - are on the verge of closure.

It is not only transporters who buy diesel from neighbours. The dealers' association, in their data, claimed 104,584 kilolitres of diesel had been procured from October 2017 to March 2018 from Bengal by industrial units in Jharkhand.

Dealers have argued that a rollback of exorbitant VAT on diesel would help state coffers too. They say that till February 2015 VAT on diesel was 18 per cent, but after it was raised, diesel sales declined significantly. Dealers have claimed in their report to the state government that revenue collection from diesel sale with 22 VAT should be around Rs 3,203 crore, but if VAT been kept at 18 per cent, the state would have earned more, Rs 3,197 crore, in the past three and half years.

"The state's decision to increase VAT was primarily aimed to earn more revenue, but according to our calculations, Jharkhand could have earned more had VAT on diesel been kept at 18 per cent, because sales would have been much higher," said Singh.