High Court’s interim order restores diesel subsidy for the public utility

The Kerala High Court, on Thursday, directed two public-sector oil companies to sell high-speed diesel at the subsidised price to the Kerala State Road Transport Corporation (KSRTC), much to the relief of the utility reeling under a financial crisis.

Justice V. Chitambaresh issued the interim directive on a petition filed by the KSRTC challenging the Centre’s decision to sell diesel without subsidy to bulk consumers.

The corporation submitted that it was incurring an additional financial burden of Rs.18 crore a month on account of the scrapping of the subsidy.

The court observed that the balance of convenience would be in favour of granting an interim order as it would be impossible to reimburse the excess amount collected from the passengers if the writ petition were to be allowed eventually. The State government had guaranteed to reimburse the deficit amount to the oil companies if the writ petition were to be dismissed.

The court pointed out that the Madras High Court had already granted an interim order restraining the oil companies from collecting a higher price on diesel sold to the transport undertakings of the Tamil Nadu government.

The KSRTC said its average daily consumption of diesel was 4 lakh litres. Even private bus operators were getting subsidised diesel. The discrimination was arbitrary and unfair.

The Indian Oil Corporation and the Hindustan Petroleum Corporation took the stand that while the Centre and the oil companies were providing a subsidy of Rs.11.20 a litre, the State government was levying almost a same sum as tax. The levy of the ad-valorem VAT rate of 20 per cent had helped it generate incremental revenue in the wake of the increase in the basic selling price of diesel meant for bulk consumers with effect from January 18.

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