The ban, which came into effect in December 2015 in the National Capital Region, could be lifted with the imposition of green cess, indicates court
New Delhi: The Supreme Court on Thursday kept the ban on sales of high-end diesel vehicles in Delhi and the National Capital Region (NCR) in place, but indicated that it could be lifted with the imposition of an additional environmental cess on their purchase.
The apex court’s remarks came after the Environment Pollution Control Authority (EPCA), a statutory authority, recommended a disincentive for purchasing diesel vehicles with engine capacity of 2,000cc and above.
On 16 December 2015, the court barred the registration of diesel vehicles with engines bigger than 2,000cc in Delhi and NCR till 31 March. It also doubled the entry tax on trucks coming into Delhi and took 10-year-old diesel commercial vehicles off the capital’s roads.
Among the worst-affected were auto makers Mahindra and Mahindra Ltd, Tata Motors Ltd and Mercedes-Benz India Ltd. In January, the companies moved the apex court against the ban.
The auto makers’ plea will probably be heard on 9 April, a Saturday—a break from the norm for the apex court.
The court also extended the deadline for private diesel taxis to convert to CNG (compressed natural gas) by a month. Separately, individual taxi drivers approached the court on Thursday, seeking monetary assistance from the government for the conversion.
According to Abdul Majeed, partner and national auto practice leader, PricewaterhouseCoopers, the court’s decision to continue with the ban on larger diesel vehicles will create uncertainty in the auto industry.
He pointed out some positive steps taken by the government after imposition of the ban by the apex court, such as the move to BS VI fuel from April 2020 instead of April 2023, and imposition of an infrastructure cess on vehicles—more on larger cars—in the Union budget.
“The government is also planning to come out with a scheme to replace old vehicles and give more push to environmentally friendly vehicles going forward. These measures should help to develop sustainable transportation in the country," Majeed added.
During the hearing, the bench comprising chief justice T.S. Thakur, justices A.K. Sikri and R. Banumathi came down heavily on luxury auto makers.
“A few extra lakhs would not pinch a person who is buying a Mercedes. We are not here to sit and decide if diesel is a pollutant; we already know that it is," the chief justice said, adding, “if a person is buying a polluting car, then he must pay more. That is the polluter pays principle."
Chief Justice Thakur also asked lawyers representing luxury car makers to assist the court and take public interest into account. “You might be passionate about your case, but even you breathe the same air. Do not look at this in an adversarial manner and assist the court so that Delhi can set an example for the country," he said.
An industry executive, speaking on condition of anonymity, said auto companies will await the next date of hearing. “We will put forward our arguments then," he said.
Industry arguments are expected to revolve around the fact that the manufacture of diesel vehicles itself is an expensive affair as compared with petrol ones. Besides, diesel vehicles are already taxed heavily—excise duty on them has been increased from 22% to 34% in the past five years.
“They are talking about an environmental compensation tax, but they refuse to understand the virtues of diesel," the industry executive said.
Legal experts questioned the court’s inclination to impose a cess. “However noble the cause may be, it is inappropriate for the court to impose a compulsory exaction from anybody. Ideally, it should be a recommendation to the government as only Parliament has the power to impose taxes," said Ramesh Vaidyanathan, managing partner of Advaya Legal, a Bengaluru-based tax law firm.
Environmentalists, however, welcomed the court’s move. “Supreme Court has been consistently taking action to reduce diesel emissions in the national capital. First it was buses, then autos and now taxis which have shifted from diesel. So, how could they let diesel cars, which are for personal use, not pay for pollution?" said Anumita Roychowdhury, executive director at the Centre for Science and Environment, a New Delhi-based environmental think tank.
According to a report by Indian Institute of Technology, Kanpur, cars and jeeps emit less than 10% of particulate matter while trucks are the bigger culprits. A big contributor to Delhi’s air pollution is road dust that accounts for about 35% of tiny particles known as PM 2.5 in the air, followed by vehicles at 25%. Other contributors are domestic cooking, power plants and industries.
Among vehicles, trucks and two-wheelers account for a larger chunk of PM 2.5 pollution than passenger cars, which contribute 14-15%.
Even though NCR accounts for just 7% of India’s auto sales, auto makers have had to make technological adjustments to their portfolios and strategies. This includes launching CNG, hybrid and electric vehicles, downsizing diesel engines to work around the ban, finding newer export markets for diesel engines and sharpening focus on petrol models.
Mayank Aggarwal contributed to this story.
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