Himachal Fuel Cess: Dealers Fear Sales Decline

Bilaspur (HP), Mar 29 (PTI) The Himachal Pradesh Petroleum Dealers Association has termed the state government's decision to impose cess on petrol and diesel as "unjustified", warning that the move would further erode fuel sales in the hill state.

In a meeting of the association held on Saturday evening, its president, Sukumar Singh Chande,l said that when the value-added tax (VAT) rate in Himachal was lower compared to neighbouring states', ”the total sales volume in the state stood at 1.2 million kiloliters, and in contrast, by 2025, sales plummeted to 900,000 kiloliters.

If the government proceeds to impose a cess now, it will trigger an even steeper decline in petrol and diesel sales within Himachal, he said, adding that operators will begin procuring petrol and diesel from other states, thereby inflicting significant economic losses on the state.

The state Assembly on March 23 passed the Himachal Pradesh Value Added Tax (Amendment) Bill 2006. This bill seeks to levy an "Orphan and Widow" cess of up to five rupees per litre on Petrol and high-speed diesel.


Sukumar pointed out that the government lacks clear statistics regarding the intended beneficiaries of the cess, such as orphans and widows,” as well as a concrete plan for the utilisation of the collected funds.

During the meeting, members expressed deep concern over the state government's decision to impose an additional cess on petrol and diesel, ”over and above the existing Value Added Tax (VAT), ”describing the move as "suicidal" for the state's economy.

The Association's Shimla unit would personally meet with the Chief Minister and the Governor to present their stance before the government, highlighting all critical aspects related to trade, legal implications, and revenue generation, Sukumar said.

Introducing new provisions into the VAT framework without a clear blueprint would set a dangerous precedent, while diversion of trade to neighbouring states would result in revenue losses for Himachal Pradesh alone, the members said.

The Association is consulting legal experts on the matter and warned it would pursue legal recourse if the issue is not resolved through dialogue.