This story is from October 2, 2015

Consumers pay extra for fuel as state fails to clear tax muddle

Motorists in Navi Mumbai, Thane, Kalyan-Dombivli and other parts of the state, barring Mumbai, had to pay the new ‘drought surcharge’ on fuel as well as local body tax (LBT) due to confusion over the government’s imposition of the tax and withdrawal of LBT at the same time.
Consumers pay extra for fuel as state fails to clear tax muddle
MUMBAI: Motorists in Navi Mumbai, Thane, Kalyan-Dombivli and other parts of the state, barring Mumbai, had to pay the new ‘drought surcharge’ on fuel as well as local body tax (LBT) due to confusion over the government’s imposition of the tax and withdrawal of LBT at the same time.
In the absence of a government notification withdrawing LBT, consumers at petrol pumps paid both—an surcharge of Rs 2 per litre and LBT—thus taking their per litre burden to approximately Rs 4-5 (LBT varies from 50 paise per litre to Rs 5 per litre depending on the city or town the consumer is living in).

The notification came only at 4pm on Thursday, though withdrawal of LBT was supposed to take place before surcharge collection would begin.
According to Uday Lodh, president of the Federation of All Maharashtra Petrol Dealers Association, oil companies communicated to petrol dealers about levy of the surcharge late Wednesday night following a government communication to them in this regard. However, Lodh said the notification withdrawing LBT was not received by companies till late Thursday afternoon.
Sources said some oil companies started charging more and some did not, thus adding to the confusion. There was no talk of refunding any part of the amount collected either.
Sudhir Shrivastava, additional chief secretary of the finance department, told TOI that the government had told all oil companies about the scrapping of LBT. “On Wednesday evening, our officials have spoken with the companies about the scrapping of LBT, so there should not be any confusion,” he said.

“The fact that the two developments (withdrawal of LBT and levying of surcharge) did not happen simultaneously may be due to lack of coordination between the urban development and finance department as UD is responsible for LBT and the finance department for surcharge,” dealers said.
Meanwhile, petrol dealers fear the surcharge will lead to a substantial increase in the price of diesel in Maharashtra and make it costlier than in neighbouring states such as Gujarat, Daman, Goa, Telangana and Karnataka, which in turn will eventually prompt all-India permit vehicles and truckers to fill up tanks in other states. According to them, the shift in business to other states will take away their profits and government revenue as well.
A senior official from Mantralaya said that in fact implementation of the decision should not be done unless a government resolution (GR) was issued in the matter. So although the state cabinet has approved the tax hike on petrol, diesel, liquor, cigarette, aerated soft drinks, gold and diamonds in order to help the drought-hit, there is room for the implementation to be stuck on technical grounds.
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