Fuel price rise due to Union govt's cess, surcharge: FM Balagopal on Modi's comment

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When the state government has not increased taxes on petrol or diesel by even one rupee in the last six years, then how can it be asked to reduce taxes, Balagopal asked.

Kerala finance minister K N Balagopal | Photo: Mathrubhumi

Thiruvananthapuram: Aggrieved over Prime Minister Narendra Modi laying the blame of rising fuel prices on non-reduction of VAT by states like Kerala, state Finance Minister K N Balagopal on Wednesday hit back saying the increase in petrol and diesel rates was due to the cess and surcharge levied by the Centre.

He said Kerala has not increased taxes on petroleum products in the last six years.

When the state government has not increased taxes on petrol or diesel by even one rupee in the last six years, then how can it be asked to reduce taxes, Balagopal asked.

He further said the reason for rise in fuel prices was not due to increase in state taxes, but the cess and surcharge levied by the Centre on sale of petrol and diesel which amounts to cutting into the state's share of the revenue from petroleum products.

The minister said that cess and surcharge are to be levied only in special circumstances like natural calamities, pandemics, etc. and for a specific period like six months or a year.

They cannot be levied for an indefinite period of time, even the Supreme Court has said so, Balagopal claimed while speaking to reporters here in the wake of Modi's statement that many states were not adhering to the Centre's call for reducing the Value Added Tax (VAT) on petrol and diesel after his government slashed excise duties on them in November last year, and called it "injustice" to people living there and also harmful for neighbouring states.

Balagopal said the Prime Minister should not have made such statements as they lead to misunderstanding among the general public.

The minister further said the Centre has no right to collect revenue from the state by levying cess and surcharge on the taxes on petroleum products.

Moreover, the state is not even given a penny from the revenue generated via the cess and surcharge, the minister said and added that this affects the economy of the state and also its interests.

He further said if the cess and surcharge are withdrawn, that itself would considerably reduce the fuel prices.

Balagopal claimed that the opposition-ruled states are being targeted in this manner.

He also claimed that earlier Kerala was receiving 3.92 per cent from the taxes collected by the Centre, but that has been cut down by half and in such a situation how can the state be asked to reduce taxes.

The minister said such actions of the Centre could end up destroying the state and the federal character of India.

He also said many states in the GST Council have sought doing away with the cess and surcharge, but the Centre has not agreed to that.

Balagopal said these issues and concerns would be raised by the Kerala government and by him in the appropriate forums and they have been raising it in the past also in various platforms and before the Union Finance Ministry, but to no avail.


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