Auto fuel dealers urge Delhi govt to roll back 30% VAT hike on petroleum products

The Delhi Petrol Dealers Association (DPDA) on Thursday wrote to Kejriwal and deputy chief minister Manish Sisodia requesting them to reduce the VAT on petroleum products stating that the “wide price disparity” with the neighbouring states has given rise to “smuggling of diesel” into Delhi from Haryana and Uttar Pradesh.

Citing a decline of 79% in the sale of diesel last month, automobile fuel dealers on Thursday urged chief minister Arvind Kejriwal to roll back the 30% VAT on diesel and petrol, imposed by the Delhi government from May 5.

People walk past parked autos and cars in a parking during an extended nationwide lockdown to slow the spread of the coronavirus disease (COVID-19) in New Delhi, India, May 3, 2020. REUTERS/Danish Siddiqui (REUTERS)

The Delhi Petrol Dealers Association (DPDA) on Thursday wrote to Kejriwal and deputy chief minister Manish Sisodia requesting them to reduce the VAT on petroleum products stating that the “wide price disparity” with the neighbouring states has given rise to “smuggling of diesel” into Delhi from Haryana and Uttar Pradesh.

Anil Bijlani, DPDA president, said the sales drop in the month of April was around 84% for diesel as compared to historical sales. “Even with partial unlocking of the state in May, the sales drop in diesel is still at 79% compared to the national average (-31%) in the month of May. The calculations show a loss of revenue to the tune of ₹58 crore a month due to higher taxes. Neighbouring states of Haryana and Uttar Pradesh, meanwhile, have recovered most of their diesel sales,” he said.

Nischal Singhania, former president, DPDA, said the primary reason for minimal recovery in diesel sales is the rate difference of around ₹7/litre with neighbouring states, resulting in Delhi losing out on sales and revenue.

“The vehicles bringing in essential commodities to Delhi were refuelling from Delhi till May 5. But, with such a rate difference, these vehicles are now refuelling from neighbouring states. A small city like Delhi is immediately affected by the price disparity. Delhi is giving away the VAT revenue on petroleum products in a platter to these states by keeping higher VAT rates,” Singhania said.

When asked for a response on the matter, the Delhi government refused comment.