VAT notice freezes fuel transportation
Source: The Sangai Express

Imphal, April 01 2023: Consequent upon an amended gazette notification issued by the State Government on March 20 which directed oil marketing companies to pay VAT before shipping oil, some oil marketing companies including BPCL, HPCL and Essar have ceased delivery of fuels to retail outlets from today.

Notably, there are around 50 ROs of BPCL, HPCL and Essar in the State.

Following the amended gazette notification, these oil marketing companies have suspended transportation of fuels to the State.

As such, ROs fed by these companies would be forced to shut down after a few days.

Speaking to media persons this afternoon, BPCL, HPCL and Nayara Energy (Essar) Dealers' Association convenor Prakash RK said that, as per the gazette notification, ROs should first pay VAT to the Government and they must produce the challans or receipts of paying VAT before shipping fuels.

Earlier, ROs first shipped fuel from the oil marketing companies and the VAT was paid after selling the same, Prakash said.

As usual, fuel transporters went to the loading points of BPCL, HPCL and Essar located in Assam but they were not allowed to load fuel on the ground that the State Government's gazette notification came into effect from today.

Payment of VAT in advance would not be a problem for IOC for they have their own depot and sales office in the State but payment of VAT in advance is highly problematic for BPCL, HPCL and Essar for they do not have their depot in the State, Prakash.

Nonetheless, plans are in the pipeline for opening oil depots of BPCL and HPCL in the State, he said.

Once these depots are opened, there would be possibility of paying VAT in advance, he continued.

He maintained that the total amount of VAT can be calculated only after selling fuel.

Moreover, prices of fuel fluctuate every now and then.

In many cases, ROs could not sell fuel in time as oil tankers get stranded on highways due to landslides, bandhs and blockades, he said.

Sometimes oil tankers met with accidents and got all the fuels spilled out.

The price of spilled fuels can be recovered from insurance companies but there is no way ROs can recover VAT in case VAT is paid in advance, Prakash said.

Moreover, there is transit loss in the transportation of fuels due to variation in temperature.

If VAT is paid in advance, how ROs would recover the VAT levied on the fuels lost in transit, he asked.

Banks other than SBI usually take two to three days in clearing cheques submitted for shipping one truck load of fuels.

Because of this very reason, payment of VAT in advance would create many problems.

The same process has to be started anew if there is fluctuation in the prices of fuels before the cheques submitted to banks are cleared, he said.

He then appealed to the State Government to review the gazette notification.

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