The rising sale of diesel in Gurgaon and Faridabad has become a cause of concern for Delhi petrol dealers. They alleged that the huge difference in the Value Added Tax (VAT) on diesel in Haryana and Delhi had been affecting their business.

Delhi Petrol Dealers Association (DPDA), the apex body of petrol dealers in the capital, recently wrote a letter to Delhi CM Sheila Dikshit urging her government to reduce the VAT on diesel to 9% from the present 12.5% to bring parity with neighboring Haryana in the coming budget for 2011-12.

The Delhi Government has kept prices of diesel higher through VAT and levy of additional cess in the capital in a bid to check vehicular air pollution and discourage sale of diesel cars and SUVs in the capital. But the governments policy to impose higher VAT and cess on diesel has failed to check the growth in the number of diesel cars in Delhi and has resulted in a revenue loss of about Rs 600 crore till date, said Atul Peshwaria, president of DPDA.

Petrol dealers said because of lower VAT in Haryana, the price of diesel per litre is Rs 1.25 cheaper in Gurgaon and Faridabad in comparison to Delhi. They said that most of the truck and taxi fleet owners prefer to buy Diesel from pumps in Haryana than in Delhi.

They said that the disparity is causing huge loss to the petrol pump owners in the capital. We are bleeding. We are not even selling what the quantity that we used to sell two years ago, despite a surge in demand for diesel throughout India. This demand supply gap is being met by the diesel traders of Haryana and not due to the conversion to CNG as claimed by the Delhi government, said Nishit Goel.