Supreme Court Lifts Ban On Larger Diesel Cars In Delhi/NCR - But Imposes Environment Cess

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Highlights

  • Supreme Court lifted the ban on 2000cc & above diesel car in Delhi/NCR
  • Manufacturers will have to pay 1% green cess to the government
  • A separate account in a public sector bank will be opened for it

Large diesel cars, mainly SUVs, can once again be sold in Delhi, the Supreme Court has said, but a green fine will have to be paid by manufacturers or dealers to compensate for polluting the city's air. The tax - 1% of the ex-showroom or retail price - must be deposited in a designated state-run bank, the top court said as it lifted the ban on 2000cc & above diesel car in Delhi/NCR.

In December 2015, the Supreme Court temporarily banned the sale of large diesel cars with an engine capacity of 2000cc or more to combat the capital's infamous toxic smog. Manufacturers argued that the decision would severely impact their sales and strand dealers with thousands of unsold cars. Dr. Pawan Goenka, President of Mahindra's Automotive Business said, "We are very relieved with the decision of the Supreme Court today. Hope this decision will put all controversy surrounding diesel fuel behind us and we will be able to focus on the more important task of making our vehicles compliant with BS 6 norms by April 2020". Pursuant to the court's directive the government has fast tracked the adoption of stricter emission norms in-line with the Euro VI regime seen in Western Europe.

Today's verdict lifting the ban was based on an appeal by Mercedes-Benz, for whom the Delhi region represents almost a quarter of sales in the country, and an association of auto-makers. Mahindra & Mahindra and Toyota Kirloskar Motor will also gain from the decision. Toyota had described the ban as "a corporate death sentence." "We are ready to go with global technology, meet global standards of emissions levels, It is best to adopt global levels and stick with that, and not keep changing policy," said Vikram Kirloskar of Toyota to NDTV.

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Maruti Suzuki Chairman RC Bhargava added, "I think we still have to see what impact this has on the sentiments of people towards diesel cars. I would suspect that the sentiments will come back in favour of diesel cars as it was earlier. And if the people are convinced that this has happened on a long term basis, then I think we will be back to doing business as usual." On the other hand, Rakesh Srivastava, Sr. VP Sales & Marketing, Hyundai Motor India Ltd. says - "It is a positive step towards addressing the challenges of customers and various stakeholders. To improve investment climate positively is most important, supported by a structured and long road map for introduction of technology with a positive tax regime in which implementation of GST will play a key role."

The government has argued against the new green cess ordered by the Supreme Court, claiming that only parliament can approve a new tax. Last month, the top environmental court in India, the National Green Tribunal, ordered authorities to stop all diesel vehicles at least 10 years old from being driven in the capital. The apex court has said it will consider enhancing the cess at a later stage, and will consider the suggestion that a similar cess be imposed on petrol vehicles as well.

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