Experts divided on Kerala High Court order seeking decision on GST on petrol, diesel
With petrol prices breaching the three-digit mark in many parts of the country, the Kerala High Court has asked the Goods and Services Tax (GST) Council to consider a representation that seeks to bring petrol and diesel under the GST regime, and take an appropriate decision in six weeks.
Experts are divided over the court’s move, with some welcoming the move and others saying the bring fuels under GST have huge implications for tax revenue collected by the center and states.
Petrol and diesel are the major revenue spinners for the Union government in the form of excise duty and cess and for states in the form of value-added tax (VAT). "Considering the rising fuel prices in the country and keeping the objective of “One Nation, One Tax, One Market” in mind, this is a welcome decision of the Kerala High Court directing the Centre to deal with this matter in a time-bound manner," said Prateek Bansal, Associate Partner, White and Brief Advocates and Solicitors.
He said that since the supply of petrol and diesel is currently not liable to GST, the taxes (Excise duty and VAT) paid thereon cannot be offset against the outward GST liability of the businesses, and thus become an additional tax cost in the supply chain of goods, which ultimately leads to inflation and is borne by the common man.
"The Constitution requires the GST Council to recommend the date on which petroleum products such as diesel, petrol, aviation turbine fuel, etc would be brought under the GST net. Under the present tax system, the excise duty and VAT collected on petrol and diesel works out to more than 125 percent of the price charged to the dealers. The overall share of petroleum products in the total tax collection is significantly higher than tax from other sectors," said Ajinkya Gunjan Mishra, Partner at L&L Partners.
