Barely an hour after it decided to hike value-added tax on petrol "up to 35 per cent" today, the Punjab government made an abrupt volte face and announced that the decision was being deferred.

"The Cabinet gave approval to amend Section 8 of Punjab Value Added Tax Act, 2005, for levying VAT on petrol up to 35 per cent in view of the recommendation of the committee comprising Deputy Chief Minister Sukhbir Singh Badal and Local Government & Industries Minister Manoranjan Kalia," an official release said after a meeting of the state Cabinet here, presided over by Chief Minister Parkash Singh Badal.

But shortly afterwards, the state government issued an "amended and updated version of Cabinet press note after dropping" the concerned para on levying up to 35 per cent VAT on petrol.

However, no reason was given for the government's sudden change of heart.

At present, the rate of Value-Added Tax (VAT) on petrol in Punjab is 27.5 per cent and the original release said the state government would increase VAT by up to 7.5 per cent.