[Resolved]  Hindustan Petroleum Corporation Ltd. — Charging VAT on Gas subsidy

Address:

Thiruvananthapuram, Kerala

The Government of India have introduced an Aadhar Linked LPG supply scheme with a view to eliminating the malpractices by the Oil Manufacturing Companies (OMC) LPG Distributors in the matter of subsidies on LPG price. As at present, there is a hidden element of tax levy apart from giving a free hand to the OMCs and LPG Distributors in regulating the price structure including subsidy to the disadvantage of the consumer Before this month’s (October) price rise the position was as indicated below:- 1 The amount charged by the Gas Company viz., Indane, B.P, H.P etc. who are Public Sector Undertakings towards a Cylinder Gas under the new scheme 984.50 2 Subsidised price that was previously charged 444.50 3 Difference between i and ii (984.50 - 444.50) = 540.00 4 The subsidy amount being credited to the Bank account of the Consumer on booking under the Aadhar linked scheme = 513.53 5 The amount collected from the Consumer now additionally.(540 - 513.53) .26.47 The revised price for a cylinder of LPG from October 2013 is 1055.03 but the subsidy remains at 513.53. It will be clear that while crediting the subsidy direct to the consumers’ Bank account, VAT is being levied on the subsidy portion of the LPG price as well. This will come to 26.47. This collection of VAT on the amount of subsidy per cylinder at 5% is immoral and unethical. Subsidy is allowed not as part of a commercial transaction but as a concession to the large number of legitimate consumers. The VAT cannot be extracted from the consumer on the subsidy amount, whatever is the justification for doing so. The consumer is being allowed subsidy as a concession to help him to meet the price situation. The benevolent sovereign State cannot pass on the incidence of tax on items that necessarily attract concessions and help. In the new dispensation of the subsidy with reference to the price rise in respect of LPG, the unkind levy of VAT on subsidy element is unacceptable. This mismanagement of OMCs and LPG Distributors cannot be checked and rationalized by merely passing on the incidence of VAT ultimately to the Consumers. The State Government will have to step in and do away with the levy of VAT on the subsidy portion in the price of LPG. The Government should reassess the procedure and consider exemption of VAT on the subsidy portion in the LPG price in the DBT scheme. In other words is needed is to assess VAT on the net price excluding subsidy in the DBT scheme. This would really be a help to the vast majority of LPG consumers who form the bulk of the society. On an important aspect like this, the State Government cannot remain an onlooker to the emerging drama in exploiting the ordinary consumer to increase the tax- revenue. We cannot regulate issues like this mechanically in the urge of moping up of financial resources of the State. The Consumer is already reeling under the impact of all-round price rise of consumer goods. The common man’s woes cannot be disregarded any further without extending a helping hand. In the matter of an essential article just as LPG, the consumers’ ire will have disastrous results.