Supreme Court breather for 2,000 cc-plus diesels

Lifts ban on registration subject to cess of 1% of ex-showroom price ■

THE Supreme Court on Friday lifted the ban on sale of diesel cars and SUVs with an engine capacity of 2,000 cc or above in Delhi and the national capital region (NCR) but imposed a 1% green cess on the exshowroom cost of these vehicles. Only after the so-called environment compensation

Automobile industry leaders welcomed the court’s decision saying it would put to rest the row over diesel vehicles and help improve the investment climate.

It may be recalled that the Centre had pleaded against imposition of green cess on diesel vehicles above 2,000 cc engine capacity, saying that these vehicles were already highly taxed and “diesel cannot be isolated to be a bad fuel with dangerous emissions”. Stating that its commitment to pollution control is as firm as the court’s, the government had said in an earlier hearings on the issue that a policy to replace 28 million old (10-year-plus) vehicles by April 2017 was being rolled out at a huge cost to the exchequer.

Modifying its December 16 order that banned fresh registration of diesel cars with 2000 cc and above engine capacity, a special bench headed by Chief Justice TS Thakur said: “Let us first get used to 1% ECC. We do not want the sword of a higher charge hanging over them at this moment.” Advocate Aparijitha Singh, assisting the court as amicus curiae in the case, had earlier suggested the cess amount be 20% to have a deterrent effect.

“We are very relieved with the decision of the Honourable Supreme Court. Hope this decision will put all controversy surrounding diesel fuel behind us and we will be able to focus on the more important task of making our vehicles compliant with BSVI norms by April 2020,” said Pawan Goenka, executive director, M&M.

Echoing Goenka’s view, Rakesh Srivastava, senior vicepresident, sales & marketing, Hyundai Motor India, said: “It’s a positive step towards addressing the challenges of customers and various stakeholders. To improve investment climate positively is most important, supported by a structured and long roadmap for introduction of technology with a positive tax regime in which implementation of GST will play a key role.”

The apex court, however, left open the questions whether the payment of ECC should also apply to registration of cars with engine capacity less than 2,000 cc and whether the rate of ECC should be increased. These issues will be decided at a later date. However, it clarified that any such increase in future would not be done retrospectively. The court modified its December 16 order despite solicitor general Ranjit Kumar’s objection that courts do not have the authority to levy such charges, which is solely in the domain of the executive.

The court had earlier said that big diesel cars and SUVs were prima facie polluting cars. The bench was hearing the plea of German luxury carmaker Mercedes-Benz, which has offered to voluntarily pay 1% environment cess in a bid to overcome the ban on registration of vehicles with engine capacity of 2,000 cc or more in Delhi and NCR. Toyota too had made a similar proposal on green levy.

Manufacturers association Society of Indian Automobile Manufactures also told the court that most of its members were willing to pay this levy if the ban on registration and purchase of above 2,000 cc diesel vehicles in Delhi-NCR was lifted. Manufacturers had argued that the ban would severely impact their sales and strand dealers with thousands of unsold cars.

Supporting the car manufacturers’ plea for relaxing the ban on the sale of such cars in NCR, the central government had argued that the allegations that “diesel is the devil” and big diesel cars should be discouraged were wrong.

On July 4, the court had reserved its verdict on pleas seeking modification of ban order after Singh had sought imposition of green cess on big diesel cars and SUVs. The court had on December 16 had also ordered that light duty vehicles would have to pay Rs 1,400 and three-axle vehicles Rs 2,600 to enter Delhi in addition to the toll tax from November 1 last year, as the ECC in a bid to check high pollution levels in the city.

Welcoming the court’s latest decision, Maruti Suzuki chairman RC Bhargava said: “Lifting of the ban itself is a right thing to do and (I) am sure the Supreme Court would have evaluated the rationale and reason for the same.”