CPCB opens bank account opened for depositing environment levy on diesel vehicles

Supreme Court had allowed registration of diesel vehicles with engine capacity above 2,000 cc after environment levy equal to 1% of ex-showroom price is paid

Following the Supreme Court order last week lifting the ban on diesel vehicles with engine capacity above 2,000 cc in Delhi, the Union government has opened a bank account where the mandated environment protection charge (EPC) can be deposited.

The ban on registration of diesel passenger vehicles was imposed in December 2016 as a temporary measure to reduce air pollution in the capital. Last week, a bench headed by Chief Justice of India T S Thakur ordered that a levy of one per cent of the vehicle’s ex-showroom price, which excludes local levies and insurance cost, be paid by manufacturers and distributors of such vehicles.

The funds collected from this are to be deposited in an account of the Central Pollution Control Board (CPCB), opened at the Indraprastha branch of Union Bank of India, the environment ministry said on Thursday.

However, CPCB officials said under the condition of anonymity, that confusion reigned on the matter as the government had filed an application against the Supreme Court order. The new levy has been named as ‘environment protection charge’ after the government had argued that imposition of taxes are the prerogative of the government.

However, an application against the order has been moved by Solicitor General Ranjit Kumar, which the court is likely to consider at its next hearing, set to take place next week.

The court may also deliberate on the issue of levying cess on diesel cars with engine capacity below 2,000 cc.

Industry insiders said the EPC will be passed on to consumers, who while depositing it have to mention the vehicle identification number and details of the dealer who sold the vehicle.

The apex court’s verdict was based on an appeal by Mercedes-Benz, for whom the Delhi region represents almost a quarter of sales in the country, and an association of carmakers.

Environmentalists fighting for harsher penalties for polluting diesel vehicles had argued that the levy was too low.

“The order is very limited in scope and is a step back from the decreasing dieselisation of the car market we had been seeing in the past eight months.”Anumita Roy Chowdhury from the Centre for Science and Environment said. Major carmakers had come out with petrol variants of existing diesel models or declared plans to do so.

The narrowing price gap between petrol and diesel has also reduced the incentive to own diesel cars. The price differential between petrol and diesel is down to Rs 9 a litre from Rs 30 four years ago. According to the Society of Indian Automobile Manufacturers, the share of diesel variants in new cars nationwide fell to 26 per cent in May from 52 per cent four years ago.

While the government has resisted demands to raise the price of diesel to the level of petrol, the Supreme Court appointed Amicus Curiae Harish Salve had suggested that basic taxes paid by petrol and diesel vehicle owners over an average 15-year period – the estimated life of a car – be equalised.

For this to occur, not taking into consideration the cost of damage being done to the environment, a tax of at least 20-30 per cent of the price of the diesel vehicle had been suggested, Roy Chowdhury said.

Delhi is the country’s sixth largest market for passenger vehicles. The number of cars registered in Delhi in March 2015 was 2.6 million. An estimated one in three passenger vehicles sold in Delhi runs on diesel.

The central government had earlier said diesel cannot be termed an undesirable fuel and suggested that air pollution in Delhi was the result of a combination of factors such as farm fires, urban dust and open cooking.