High Court stays levy of VAT on lost petroleum products

New Delhi, Mar 19 (UNI) The Delhi High Court has stayed levying of Value Added Tax (VAT) by the state government on petroleum products lost due to evaporation during transportation from the refinery to the petrol pumps.

While issuing notices to the Ministry of Petroleum and Natural Gas, the Delhi Value Added Tax commissioner and the Value Added Tax Officer (Policy-III), a division bench headed by Justice T S Thakur said, ''The recovery of tax relating to 0.06 per cent of the stocks purchased and lost due to evaporation shall remain stayed till the final disposal of the petition.'' The government imposes VAT on petroleum products purchased by the petrol pumps at the exit points of the refineries without cosidering the evaporation aspects, after the introduction of VAT system in the Capital.

The Delhi Petrol Dealers Association had moved the court challenging state government's circular of January 23, 2006 to levy VAT on the lost petrol, diesel and other petroleum products.

The Association in its representation to the government said that they had paid VAT on the deemed sale of petroleum products, which were lost due to evaporation during transit.

While alleging that it would suffer heavy loss if the input tax credit is reversed, the petrol dealers said that the exchequer had already collected VAT on the deemed sale of the whole petroleum products from the petroleum companies - Indian Oil, Bharat Petroleum, Hindustan Petroleum and others.

''The VAT can be imposed only on the sale price under the provisions of the Act and the government cannot tax the same product twice i.e. on the sale price and again by reversing the input tax credit,'' the petition stated.

During transportation and handling, the petroleum products lose their volume, which is not only natural but also beyond the control of oil companies and dealers, the petitioner said.

UNI PAT LR GC1449