VAT on cess

[Kishor Deshpande]

While purchasing petrol or diesel from the oil companies, the oil compnies are charging cess on the value of petrol or diesel after charing Value added tax on the value of petrol or diesel. That is they are not charging valued added tax on the amount of cess. Then when a petrol pump dealer sell petrol or diesel then he is simply recovering the value of cess in his gross value of cess. But VAT department is demanding the VAT on cess at the time of sale effected by the petrol pump dealer. Since the dealer is liable to pay VAT on his commission i.e. value addition. In addition to this the dealer is not fixing his sale price. So,what should be position in this situation.

AI Summary

Debate on VAT Application to Cess Charged on Fuel by Oil Companies; Dealers Urged to Provide Detailed Workings A query was raised about whether VAT should be applied to cess charged on petrol and diesel by oil companies. The oil companies charge cess after applying VAT on the fuel, but do not apply VAT on the cess itself. When petrol pump dealers sell the fuel, they include the cess in the gross value, but the VAT department demands VAT on the cess at the point of sale. A response suggested that cess should be part of the gross value for VAT purposes, and dealers should present detailed workings to argue against including cess in the sales price before the VAT officer.