Date:04/04/2005 URL: http://www.thehindubusinessline.com/2005/04/04/stories/2005040401721300.htm

Back Roll back price hike, AP Govt tells oil cos

Our Bureau

Hyderabad , April 3

TAKING serious objection to the recent hike in petroleum prices by the oil companies in Andhra Pradesh in the guise of the VAT Act 2005, the State Government has asked them to immediately roll back the prices.

Addressing newspersons here on Sunday, the State Minister for Commercial Taxes, Mr Konathala Ramakrishna, said the State Government has also took the issue to the notice of the Union Petroleum Ministry and asked to initiate appropriate measures.

According to the Minister, the petroleum companies had resorted to price increases in the State even earlier under the guise of `State surcharge'. As a result, the prices in the State now stand very high compared to the prices prevalent in other States.

The oil companies increased the prices from September 1, 2002 by 20 paise on diesel and 30 paise for petrol per litre in other States, whereas the price increase in AP amounted to Rs 1.04 on petrol and 76 paise on diesel.

According to the AP Commercial Taxes Department, it was ascertained from the Indian Oil Corporation Ltd that the price hike was given effect in AP by taking into account the element of `State surcharge', which was enhanced from Rs 138 per kilolitre to Rs 470 per KL on diesel and Rs 295 to Rs 785 on petrol.

"It appears that in the guise of the `State surcharge' the oil companies passed on the tax burden to the customers of Andhra Pradesh. At that time, they had not put forth any convincing reason as to why the `State surcharge' was compelled to be increased only in the case of AP. It is to be construed that this was mere ploy to pass on the burden to the customers, and the practice was continued till March 31, 2005," the State Commissioner of Commercial Taxes said in a press release.

Further, according to the Commissioner, the oil companies, without consulting the State Government enhanced the prices suddenly by 64 paise on petrol and 49 paise on diesel.

The reasons put forth by the oil companies was that under the VAT Act, 2005, the rates of taxes were enhanced from 19.33 per cent to 21.33 per cent for diesel and from 30.55 per cent to 32.55 per cent on petrol.

"The reasons put forth by the companies are not convincing as the AP VAT Act 2005 had not increased the effective rates of taxes. In fact, it rationalised the then existing rates of petrol and diesel under the AP GST Act.

Oil companies have been paying the tax at the rate of 21.33 per cent on the diesel and 32.55 per cent on the petrol. Under the VAT Act also, the companies are asked to pay the tax at 21.33 per cent and 32.55 per cent on diesel and petrol respectively," the Commissioner said.

Hence, the Minister said once again passing on the tax burden to the customers of AP in the guise of the AP VAT Act 2005 and increasing the prices of diesel and petrol was not as per the provisions of the new Act.

The Minister has also appealed to the State-based chemists and druggists to withdraw their strike against the VAT.

Stating that the continued strike was causing problems to patients across the State, he said the Government would also consider taking action against the chemists and druggists under the Essential Commodities Act.

Meanwhile, the Government has also initiated measures towards alternative supply of medicines to the needy patients, Mr Ramakrishna said.