States ask Centre to provide details on ATF price fixation

NEW DELHI: States on Monday asked the Centre to give full details of how prices of aviation turbine fuel are fixed, before they could take a call on reducing sales tax on the petroleum product, as desired by Civil Aviation Minister Praful Patel.

"We will discuss the issue at the VAT panel's next meeting in Srinagar between June 21-23 after getting full details of price fixation of ATF from the concerned Ministry," Empowered Group of state finance ministers on VAT Chairman Asim Dasgupta told reporters.

On persistent queries whether ATF could be brought in the category of "declared goods" which would reduce sales tax on it from at least 20 per cent to VAT of four per cent, Dasgupta said the committee wanted details on price fixation from the Centre.

Patel had last week made a strong case for giving ATF declared goods status in a meeting with Prime Minister Manmohan Singh and Finance Minister P Chidambaram.

Patel had said urgent steps were needed to bail out the aviation industry, facing problems due to high fuel prices as otherwise it will have a "cascading effect" on the entire economy.

"This is an extra-ordinary situation. There is a crisis in the aviation sector and we must all collectively try to find out the solution as otherwise it is going to affect in a big way the overall growth of the sector," Patel had said.

"We have also explained that it is not so easy for a vital sector like aviation to go belly up and it will have cascading effect or multiplied effect on the entire economy," he said.

The jet fuel prices increased by 100 per cent in the last one year. The ATF price has gone up from Rs 21,000 per kilo litre in 2004 to more than Rs 70,000 now.