NEED FOR EXCISE DUTY EXEMPTION ON DIESEL FOR KSRTC

[jayaprakash gopinathan]

Traditional wisdom is being passed on by generations without any systemic procedure, agenda or even any tangible evidence. It happens and when price of commodities rise beyond the tolerable limit, statesmen who were concerned for the common man selectively abolished the Excise and Customs duties on such commodities. At times it may be against the interest of the nation’s economic growth and health. The present leadership had also done away with import duty on ATF used by Aircrafts and the Centre is urging states to withdraw VAT applicable to ATF to save the aviation industry. Today the import duty on Air Turbine Fuel (ATF) is NIL.

when I watched the Hon’ble Minister of Transport of Kerala’s press conference, indicating the inability of those in authority, after a meeting with the Finance Minister of India seeking intervention to reduce the price of diesel for Kerala State Transport Corporation, months ago at the outset of the crisis of higher price for diesel,  I visualized an affluent Industrialist travels by his copter from his Special Economic Zone in the east to the one in the west using the Air Turbo Fuel drawn from the tank in the SEZ. The ATF is imported duty free.  No excise duty is leviable on it. The flight takes off from an assumed foreign territory to another assumed foreign territory within the country.  Of course Special Economic Zone is special irrespective of the colour of the flag. When the Hon’ble High Court of Kerala directed oil companies to treat KSRTC as a special entity, I realized the irrelevance of this paper. But the Apex court set aside the order and KSRTC is no more special.

So as an ordinary passenger of KSRTC, it appears appropriate to examine the impact of indirect taxes on the price of diesel and that of the ATF and whether the traditional wisdom of interference through the indirect tax to extend concession to the downtrodden’ mode of transport is feasible. This may be read by recollecting the immediate actions by authorities to order 0 percent duty on ATF when there was a price rise for the petroleum products and the pressure being exerted to do away with the state VAT. taxmanagementindia.com

Considering the economic scenario of the nation, it may not be possible to reduce the effective rate of duty of excise on diesel as done in the case of import of ATF. At present it is 16 percent +Rs.2.50/ liter. The effective rate of ATF is 8 percent . The present turmoil with the State Transport Corporation is due to its gradation as a bulk customer. All the subsidies were withdrawn for the fuel it consumes. So the State Road Transport Corporation stands alone from other transport operators. Any concession on duty of excise for the State Transport Corporation will be a concern for its implementation due to its possibility of large scale misuse and pressure to extend the benefit to private players. As stated above the private players are not bulk buyers of fuel and hence they get the subsidized fuel. Without any chance for malpractice, it appears feasible to extend a helping hand to the public transport corporation through a refund system of excise duty on diesel consumed by the State Transport Corporations. There need not be any bond to be executed for clearing nor non-duty paid (partially duty paid) diesel. There need not be any fear that it will flow to the black market. A percentage of duty paid can be refunded to the corporations to nullify the impact of the turmoil now created by the oil companies by withdrawing subsidies to these transport corporations terming them as bulk consumers.

Concessions and refunds are extended by legalizing hypothesis and fictions to the upper strata of the society as in the case of Special Economic Zones etc. etc.. Such benefits should also be extended to the common good of the common man. This is placed before the political executive and others capable of influencing the society, who once availed the concession ticket of these corporations during their student days. The need for an excise duty exemption is in tune with the safe keeping of traditional sensibilities.