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Pay 1% Interim Green Cess to sell diesel cars – SC to Mercedes, Toyota

The 7-month long ban on sale of diesel cars and SUVs with engine capacity above 2000cc could soon come to an end following a Supreme Court proposal to impose a 1% Interim Green Cess on sales of such cars.

Mercedes Benz along with Toyota, the two car brands who have been affected the most due to this ban, have told the court that they would comply with this regulation so that their sales would not be hampered.

Mercedes-Benz diesel cars with engines above 2000cc and Toyota Innova Crysta (only available in 2.4l and 2.8l diesel engine option) have seen a significant fall in sales following the ban. According to the SC proposal, the companies will have to deposit 1% of the car’s retail value into an escrow account towards Green Cess.

The levying of green cess on diesel vehicles under the ‘polluter pays’ principal, has however raised the issue that the Court has no jurisdiction to impose such a tax which fell under the government’s domain while the court has no right to state that ‘diesel is the devil’.

Mukul Rohatgi, Attorney General has also stated that such a green cess on diesel cars above 2000cc engine capacity is not according to the terms of Article 265 of the Constitution of India. No tax can be levied without legislation by authority of Parliament. The cess on diesel vehicles, which are considered more polluting than petrol engine vehicles, is one way of deterring sales, preserve the environment and ensure health of the general public with better and cleaner air.

The Attorney General has asked the court to give the Government 6 weeks time to conduct a study into the ill effects of diesel cars, emission and use of subsidized fuel and come to an amount that will be imposed on vehicle manufacturers.

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