Supreme Court breather for 2,000 cc-plus diesels

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

The Financial Express - - FRONT PAGE - Fe Bureau

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.”

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