The Empowered Committee of state finance ministers on VAT, headed by Left-ruled West Bengal's Finance Minister, on Thursday took a "unanimous" decision to ask the Union Finance Ministry whether it is contemplating any excise cut on petrol and diesel.
The decision comes after Petroleum Minister Murli Deora asked states to slash sales tax on fuel prices to partly offset the hike in prices of petrol and diesel. After the Empowered Committee's meeting, its chairman Asim Dasgupta said the Union Finance Ministry should also provide them information about determination of domestic basic prices of petroleum products in relation to international crude prices over the last three years.
"We will consider the Union Petroleum Minister's request after we get information on these three matters," he said.
While some states ruled by Congress and other UPA constituents have reduced sales tax, bringing down fuel prices by up to Re 1, Left and NDA-ruled states that criticised the hike in petro prices are yet to cut sales tax on fuel.
When asked about some states, including Delhi, Andhra Pradesh, Maharashtra and Tamil Nadu cutting sales tax on petrol and diesel, Dasgupta said the issue did not figure at the meeting since the decisions were taken at the "other" level. All the four state governments are run by UPA constituents.
Dasgupta emphasised that the decision taken by the Empowered Committee was unanimous. "The Delhi Finance Minister was present at the meeting. And we conversed with Maharashtra Finance Minister on phone (about the decision)," he said.
After hiking petrol prices by Rs 4 per litre and diesel by Rs 2, Union Petroleum Minister Murli Deora had requested state chief ministers to cut sales tax on these products so as not to pass on the entire burden to consumers.
On its part, the Centre had also announced customs duty cut on petroleum products from 10 to 7.5 per cent and issuance of bonds of Rs 28,000 crore (Rs 280 billion) to oil marketing PSUs.
Dasgupta said VAT committee did not accept Deora's request for bringing down uniform floor rates on petrol and diesel to 12.5 per cent from current 20 per cent.
He also explained that petrol and diesel have not been brought under VAT since its prices are not market determined. Meanwhile, Uttar Pradesh government ruled out slashing sales tax on petrol and diesel.
"We don't have any such intention (to reduce sales tax on petrol and diesel) as the revenue from this tax goes for development works," state Agriculture Minister Ashok Bajpai said.
The state levies 25 per cent sales tax on petrol and 20 per cent on diesel. Bajpai also demamaded 25 per cent subsidy from the Centre on value of diesel used by the farmers.
