Ban on inter-state sale of petro products lifted

Against the high sales tax rates by individual states, going up to 34 per cent in case of Mumbai, the product sold inter-state would attract a uniform tax of 4 per cent.

Following this decision, furnace oil, low sulphur heavystock, heavy petroleum stock, residual fuel oil, light diesel oil and bitumen can now be sold to customers on an inter-state basis but sale of high speed diesel would be restricted to bulk customers.

The oil ministry had received representations from industrial users who were economically hurt by the decision to ban inter-state movement. The step would also help reduce the cost of operation for the industry.

As a result of the high sales tax rates — ranging from 5 per cent to 34 per cent in different states — national oil companies had significantly lost their markets for industrial inputs like naphtha and furnace oil as private refiners and importers were kept out of the purview of the ban. National oil companies have lost more Rs 500 crore worth of business in furnace oil since June this year following imposition of the ban.

The Government has also allowed oil companies to consider increasing the prices of naptha for re-processors so that its use as an adulterant is made unviable. This initiative would minimise the adulteration of transportation fuels like petrol and diesel with naphtha.

According to an official release, the oil companies have been directed to ensure that inter-state sale is made to customers who physically exist and to verify the certificates granted by the sales-tax authorities once in a year. The verification of the physical existence and the validity of the original certificate should be kept on record along with certified copies of the certificate.

The industrial customers are required to inform the oil companies about any reduction in capacity/temporary closure whenever it takes place.