Confusion over Supreme Court order on diesel vehicles in Delhi

Government, green groups oppose aspects of order that are yet to be deliberated upon by the court

Automobile makers may cheer Friday’s order by the Supreme Court lifting the ban on registration of diesel vehicles with engine capacity over 2,000 cc in Delhi, but the government and green groups are opposing various of its aspects.

The ban on registration of passenger vehicles with diesel engines of 2,000 cc or more was imposed in December as a temporary measure to reduce air pollution in the capital. On Friday, a bench headed by Chief Justice T S Thakur had ordered one per cent of such vehicles’ ex-showroom price be paid by manufacturers and distributors for registration in Delhi.

The funds collected from this levy was ordered to be deposited in an account of the Central Pollution Control Board (CPCB) to be opened in any public sector bank.

However, CPCB officials said the government itself had filed an application against Friday’s order. The new levy has been named environment protection charge after the government argued imposition of taxes was the prerogative of Parliament. Solicitor-General Ranjit Kumar on Friday moved an application against the order, which the court is likely to consider at the next hearing.

“No bank account has been opened because details of the Supreme Court order like the rate of tax is sub judice,” a CPCB official said. With the court not specifying the date of the next hearing, the matter has become more complicated.

Friday’s verdict was based on an appeal by Mercedes-Benz, which sells a quarter of its cars in the Delhi region, and an association of automobile makers. Mahindra & Mahindra and Toyota Kirloskar Motor will also gain from the decision. Toyota had described the ban as “a corporate death sentence”.

These companies had earlier offered to pay a one per cent additional tax on diesel vehicles with engines above 2,000 cc, sources said. Environmentalists fighting for harsher penalties on polluting diesel vehicles had argued the one per cent levy was low.

“Yesterday’s order is limited and is a step back from the decreasing dieselisation of the car market,” said Anumita Roy Chowdhury of the Centre for Science and Environment. Car makers have come out with petrol variants of diesel models or have declared plans to do so.

Amicus Curiae Harish Salve has suggested rates of additional levy for all categories of diesel vehicles and the court said the levy could be applicable to vehicles having engines smaller than 2,000 cc.

While the government has resisted demands to raise the price of diesel on a par with petrol, Salve suggested basic taxes paid by petrol and diesel vehicle owners over a 15-year period be equalised.

For this equalisation to occur, a tax of 20-30 per cent of the price of a diesel vehicle had been suggested, Roy Chowdhury said.

The Centre had earlier said diesel could not be termed an undesirable fuel and suggested air pollution in Delhi was due to a combination of factors such as farm fires, dust and open cooking.