Dealers fear new VAT rule will create fuel shortage
Source: Chronicle News Service

Imphal, April 01 2023: While stating that the gazette notification issued by Manipur government for pre-payment of Value Added Taxes (VAT) for Petroleum products is unreasonable; BPCL, HPCL and Nayara Energy (Essar) Dealers' Association has urged for putting the same on standby, adding that companies have refused to give fuel on account of the notification and as such, there is possibility for fuel shortage in the next 2-3 days.

Addressing a press meet in this regard on Saturday, Association convenor RK Prakash recounted that the state government issued a gazette notification on March 24, amending the Manipur Value Added Tax Act.

The notification stated that dealers are to pre-pay the VAT to the state government and give the challan to the companies to lift the fuel.

However, this amendment is unreasonable.

He explained that after purchasing the fuel from the companies, the money earned from selling the same to consumers is then used to pay the VAT.

VAT is not paid before the sale of a product but after sale.

This has been the norm for years.

However, the government's demand for pre-payment contradicts VAT itself and as such, companies have stopped giving the fuel.

In addition, the government says that the notification will go into effect from April but the dealers were informed of the same from the companies only on Friday.

As such, customers of PCL, HPCL and Nayara Energy (Essar) will be facing a fuel shortage since the companies are refusing to give the fuel without VAT and the fuel in stock is likely to run out in the next 2-3 days.

The oil-tanker drivers are stuck and the dealers along with the companies are losing money.

Those working at oil-pumps will also not be spared from this entire situation and even, the government will lose out on the related-daily taxes, he said.

RK Prakash further informed that the VAT is paid after the company generates an invoice for the fuel purchase.

If the VAT is pre-paid, it would be impossible to know the exact amount in the invoice.

Furthermore, as the fuel prices fluctuate on a daily basis, the pre-payment of VAT will be unfeasible.

More importantly, the fuel is to be purchased from Assam.

If, after payment of taxes, the tankers happen to be stuck on the road due to circumstances or meets with an accident, leading to the loss of the fuel, the question will be on who is going to be the one to suffer the most losses, he remarked.

For IOC, it has a depot in Manipur and as such, there is no problem for them with regard to pre-payment of VAT.

But the same cannot be said for other companies.

Companies cannot pay more or less tax but must be in strict accordance with the price of the fuel.

This bizarre rule by the Manipur government is not followed either in the neighbouring states or anywhere across the country.

It would have been better if the government had talked with the dealers and stakeholders and informed them if any rule change beforehand, he lamented.

RK Prakash then said that the government notification will be difficult to enforce and as such, urged for the same to put on stand-by for some time to facilitate further discussion.

Informing that as the government had already approved for setting up a BPCL depot in Manipur with the process for lease agreement in its final stage at the DC concerned, while HPCL had also requested land from the government in 2021 for Setting up its depot; the convenor said that once the depots are set, the IOC rules could be implemented effectively.

Thus, it is regrettable of the government to make such a contradictory amendment amid these ongoing efforts, he remarked.

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