SC lifts ban on large diesel vehicles but levies 1% cess

New Delhi: The Supreme Court lifted a ban on the registration of large diesel cars across the national capital region on Friday but imposed a 1% cess, aimed at cleaning

New Delhi: The Supreme Court lifted a ban on the registration of large diesel cars across the national capital region on Friday but imposed a 1% cess, aimed at cleaning up Delhi’s foul air. The charge will be on the ex-showroom price of the vehicle.

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A bench headed by chief justice TS Thakur also indicated it would create a broader mechanism to check air pollution by diesel vehicles, saying it would decide later whether to increase the cess or impose it on smaller cars as well. The Centre’s contention that the court cannot order such a levy will also be adjudicated later.

According to HT’s estimates based on last fiscal’s sales data, a 1% cess on the most popular utility vehicles and SUV’s will yield around `54 crore for the exchequer in a year.

“The transport authority will register a big diesel car only if receipt of payment of green levy is shown,” the bench ordered. The environment protection charge will be paid with the Central Pollution Control Board, which was directed to open a separate account with a scheduled public sector bank to deposit the amount.

The top court had on December 16 first clamped the ban, one among a raft of judicial measures to clean up the Capital’s air that is among the worst in the world. The ban was for three months but was extended indefinitely.

The decision to allow sale of such cars came four days after German carmaker Mercedes-Benz told SC it was ready to charge 1% cess on the cost of its vehicles to get rid of the ban on registering vehicles with engine capacity of over 2,000cc. Other manufacturers sought a similar relaxation from the court.

The automobile industry welcomed the order. “We as a voluntary interim measure, offered to pay 1% of the ex-show-room price of the vehicle towards anticipated environment compensation charge as a deposit, and not on the premise that our vehicles are polluting the environment...” Mercedes-Benz said in a statement.

“...We reiterate that, being the pioneers of numerous technological innovations, Mercedes-Benz has the technology available and can switch our entire fleet to BS VI by 2018,” the statement said.

Pawan Goenka, executive director of Mahindra & Mahindra, said the company was relieved. “Hope this will put all controversy surrounding diesel fuel behind us and we will be able to focus on the more important task of making our vehicles compliant with BS VI norms by April 2020.”

Rakesh Srivasatava of Hyundai Motor India described the court order as a positive step addressing the challenges of customers and various stakeholders. “To improve investment climate positively is most important, supported by a structured and long road map for introduction of technology with a positive tax regime in which implementation of GST will play a key role,” he said.

Mercedes had rushed to the top court, complaining that in the absence of an authoritative pronouncement from Supreme Court on the issue, high courts and state benches of the National Green Tribunal (NGT) had started banning the sale of such cars. It cited a Kerala NGT order that enforced the ban.

Automobile companies offered to charge the cess to counter the recommendation of the Environment Pollution (Prevention and Control) Authority, which has proposed a green tax of 20-22% of the ex-showroom price of diesel vehicles.