The petroleum products such as crude oil, natural gas, diesel, petrol, and aviation fuel are outside the ambit of GST and they are subject to the levy of Central excise and State specific VAT regulations. Since these petroleum products are still outside the GST net, there is a loss of input tax credits (ITC) that is paid towards excise and State VAT, as the same cannot be off-set towards output GST. Similarly, GST on capital goods and input services, becomes a cost for the petroleum industry. Since the genesis of GST, the question which strikes our minds is, why are the Petroleum Products still controlled by the State and not made a part of GST?
Source Taxscan
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