Have you ever asked for an invoice after fueling up your vehicle? Ever noticed the lack of tax amount paid on it? Nearly 50% of petrol or diesel rates are various taxes and the sales tax of alcohol, a striking 250%. Then again, this amount is not mentioned in the generated bill. Don’t we consumers have the right to know to whom and how much money we are paying? Every bill of our day-to-day lives mentions the amount we paid as GST, yet receipts from petrol pumps or beverages omit this. Is this negligence? And if yes, why is it followed on such a large scale across the nation without any legal consequences? What is so special about the taxing system for these products?
The prevailing law
The Excise Act 1958 and the Central Excise Tariff Act 1986 handles the tax the centre imposes on liquors and fuels respectively, and each state has their own acts to tax liquor and petroleum products this is why there are different tax rates levied by the respective state governments on the same products.
The Excise Act 1958-part V, S.17, and S.18 deal with the central government’s duty on liquors, and chapter 27 S.5 of the Central Excise Tariff (2017-2018) from the Central Excise Tariff Act deals with the duty imposed on petroleum products. Chapter III S.5 (1)(a) and (1)(b) of the Kerala General Sales Tax Act, 1963 deals with the states taxing on petroleum products and liquor in Kerala.
The issue.
Here is a comparison between the bill from a general store, a petrol pump, and a beverage. The lack of division of the amount paid for the product and the amount paid as tax is evident in the latter two.
Components of alcohol and fuel rates.
On alcohol, the taxes are excise duty and levies such as sales tax, gallonage fee, etc. On top of it, some states even charge VAT on the level of production and distribution. Excise duty is a tax levied to discourage the consumption of a product. It is calculated on a per-unit basis. Value-added Tax is charged in the proportion of the product. For Kerala, the tax on liquor is its single largest revenue source. The state also has the highest liquor sales tax – almost 250 percent. The state controls the liquor market with its agency, Kerala State Beverages Corporation. In response to the pent-up demand, it increased the price of liquor by 7 percent this month.
There are 2 components of petrol tax. The central government taxes the production of petroleum products, while states tax their sale. The Central Government of India imposes a central excise duty and the state government charges sales tax, additional sales tax, and cess. While excise duty rates are uniform across the country, states levy sales tax/ Value Added Tax (VAT) varies across states. The combination of these taxes regulates petrol price and tax in a state. This price is set every day at 6 am. The elements of the current petrol rate of Kerala are given below:
| Rate components | Rupees per liter |
| Dealers | 48.23 |
| Dealers commission | 4 |
| Central revenue- excise duty | 32.90 |
| State revenue- KGST | 24.90 |
| Total petrol rate | 110.03 (as of 27th March 2022) |
Why tax is not mentioned on fuel and alcohol invoices.
Fuel retailers do not remit the taxes directly as most retailers do. Retailers purchase fuel from the suppliers in bulk with the taxes already included in the price. Hence, fuel prices at the pump include the central and state taxes. The tax is paid when the fuel is taken from bulk storage by suppliers, who are the companies directly above the retailer. This is why these invoices do not specifically mention the tax rates. This amount is included in the price we pay and the tax is paid indirectly without specification, unlike GST. In fact, alcohol and petroleum products are some of the only products where this type of taxation method is followed.
This is just a coarse way the government hides the multitude of taxes it collects on these products which can still be considered a loot.
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