Bengal tax & cess hit fuel sales, neighbouring states gain

High taxation has led to drastic drop in diesel sales in West Bengal though volumes have perked up in the rest of the country.

In the first eight month of 2004-5, all major oil marketing companies (OMCs) saw a 3.7 per cent drop in diesel sales in Bengal, but sales grew 10 per cent nationally.

Oil industry officials pointed out diesel was cheaper by Rs 1.60 per litre in neighbouring states like Jharkhand and Rs 2.04 cheaper per litre in Assam.

Long distance truck drivers and owners were buying fuel from these states instead of West Bengal.

West Bengal had highest sales tax (ST) on fuel among states in the region. ST in Bengal was 17 per cent against 15 per cent in Jharkhand and Bihar.

A cess of Re 1 per litre was payable in West Bengal in addition.

Oil companies have not lost money overall because of higher sales in neighbouring states.

The West Bengal government was however losing on revenue from ST and cess.

"Truckers buy bare minimum requirement within the state. They fill up tanks only when they cross the border," Gautam Datta, general manager of IOC, said.

The sales tax was hiked in July 2002 while cess came into effect from August 2003.

Fuel sales saw a sharp decline after that. With the spiraling cost of diesel, truckers have become more conscious about fuel costs.

In April-November period this year, 9,50,000 tonnes of diesel was sold in West Bengal against 9,86,000 tonnes last year.

Petrol or motor spirit sales in Bengal rose 1 per cent while nationally it went up by 4.5 per cent.

"MS sales is more localised in nature and reflects the general state of economic development," an oil industry official pointed out.