Chandigarh, Jan 23 (IANS): Alleging that inaction of the Punjab government to levy VAT on petrol and diesel at par with neighbouring states is causing huge revenue losses of crores annually on account of diversion of business and smuggling, the Petrol Pump Dealers' Association of Punjab (PPDAP) on Monday announced a statewide agitation starting on Tuesday.

Association President Paramjit Singh Doaba warned that if the Punjab government did not heed their demands, they would intensify their protest by shutting down petrol pumps across the state.

"We have submitted numerous representations to the government, but it has turned a deaf ear to our pleas, leaving us with no choice but to resort to an agitation," Doaba told the media here.

The association will begin its indefinite hunger strike from Tuesday, demanding an immediate cut in VAT (Value Added Tax) rates and an inquiry to expose the nexus between smugglers and Excise and Taxation Department officials.

"The unreasonably high VAT on petrol and diesel in Punjab is a scam to the tune of Rs 40,000 crore. Rather than adding to Punjab's revenue receipts, a higher VAT has set the state exchequer back by a whopping Rs 40,000 crore in 17 years. The disparity in VAT in comparison to neighbouring Haryana, Himachal Pradesh and Chandigarh is causing the Punjab government revenue losses of Rs 2,000 crore per annum. Matters have now gone from bad to worse with Punjab's revenue from VAT on petrol and diesel declining by Rs 190 crore in the first half of 2017-18 in comparison with corresponding period last year," PPDAP Spokesman G.S. Chawla said.

Chawla alleged that this scam in Punjab is being done at the behest of the Excise and Taxation authorities.

"The only beneficiaries of this losing proposition are excise and taxation authorities and unscrupulous elements, including dealers, who continue to work in collusion to rob Punjab of its rightful revenue through diversion of business to neighbouring states and smuggling. Not only are people of the state paying more, the government is also suffering losses as its rightful revenue is not reaching it at all," he said.

Explaining how petrol and diesel is being smuggled into Punjab from neighbouring states with impunity right under the government's nose, Chawla said: "Unscrupulous dealers are smuggling lower-priced petrol and diesel from neighbouring states and selling them at market price in Punjab without paying VAT to the Punjab government. Milk tankers are used for smuggling in bulk. Since these supplies have no records, the illegal business does not reflect in sales figures at all. So, a heavier VAT on petroleum products will not translate into extra revenue, as is being made out by the Excise and Taxation Department authorities in tacit understanding with unscrupulous dealers."

He pointed out that petrol dealers in Punjab were suffering losses of hundreds of crores of rupees due to the higher price of fuel in the state.

He demanded a lower VAT to attract additional revenue of Rs 2,000 crore per year.