With the GST coming into force the people are demanding that it be applied on petrol and diesel also to have one price throughout the nation ensuring uniform goods transportation cost to secure one price of all other commodities also.
But in all the meeting of Central GST Council Finance Ministers of the state opposed its inclusion in the GST as the VAT on these two items are biggest source of revenue in the state budget.
In recent constant hike in petrol-diesel prices disturbed the economy shaky by one way of upgoing transport cost on the movement of goods. The Centre also appeared reluctant I reducing Central Excise duty on these products dashing the hope of the people of any slashing in the petrol-diesel prices. But the public outcry on petrol-diesel prices compelled the Central Government to do something.
It is really regrettable that there are moves to bring petrol and diesel under the GST but violating the basic concept and object the GST to make it one tax for the whole nation.
In the proposal despite CST states will be allowed to keep its VAT on it which differ from state to state. Further more in price fluctuation of petrol products states will revise its VAT upwards and it has been done some years ago when the prices of petrol crude slumped upto 40 dollars per barrel.
As the proposals the GST Council will keep petrol and diesel on the highest slab of GST at 28 per cent and state will also keep the VAT Tax System as it is. When crude prices fell and fall the Central Government do not reduce its excise duty and state its VAT on it.
The Central Government had raised excise duty on petrol by 11.77 a liter in nine installments between November 2014 and January 2016 and that on diesel by Rs.13.47 a liter in the period. While global oil prices fell the States raised its VAT income from Rs.137-157 crore in 2014-15 upto 184.91 crores in 2017-18.
Even after the GST the VAT of states will also continue and there can never be one price of petrol and diesel throughout the country and with VAT it will never be one price in the nation. If there is only GST and no VAT the prices of petrol will come down from Rs.81.90 per liter to Rs.50.43 per liter and that of diesel from Rs.71.38 to Rs.53.17 per liter.The Union Government must ensure there is only one tax GST and no states VAT.