A Division Bench of the Kerala High Court on Monday directed the Union Government and the Goods and Service Tax (GST) Council to explain the reasons for not including petrol and diesel within the ambit of the Goods and Service Tax.
The Bench, led by Chief Justice S. Manikumar, passed the directive on a writ petition filed by the Kerala Pradesh Gandhi Darshanavedi, Thiruvananthapuram, challenging the GST Council's decision not to include petroleum products under GST.
The petitioner pointed out that the council meeting had recently decided it was not appropriate to include petrol and diesel under GST at this stage. The council had met to consider a representation given by the petitioner seeking to bring the products under GST following the High Court directive.
When the petition came up for hearing, counsel for the petitioner, Arun B. Varghese, argued that that the council had not given any proper reasons for rejecting the petitioner’s request. There was no application of mind by the council. The present situation was ripe enough to take a decision in this regard as the price of petrol and diesel was surging on a day-to-day basis and had a crippling effect on the economy. In fact, those who did not even use petrol and diesel were also equally affected by the price rise, it was argued.
Different rates
The petitioner pointed out that different prices were being charged for petrol and diesel in various States in the country due to different rates of tax levied by State Governments. In fact, it was an impediment to achieving harmonised national market as contemplated under Article 279A (6) of the Constitution.
The rise in price of petroleum products had a cascading effect on all commodities, including essential ones, leading to an increase in the cost of living, both in rural and urban areas. In fact, the prices of fuel need to be rationalised, said the petitioner.
The Centre and the GST Council could not content that if the fuel was included in GST, it would have implications on revenue generation. A constitutional duty was cast upon the GST Council to make a recommendation to include petrol and diesel under the GST regime. If it was brought under GST, the maximum tax rate would be 28%, the petitioner said.
Though oil companies had no choice but to fix the prices as per the global market rate for crude oil, the higher rate of tax levied by the Centre and the State Government was impacting fuel prices.
The petitioner sought to quash the decision of the GST Council and also pleaded for a directive to the council to include the fuel in the ambit of GST.
