Rajya Sabha MP Sasmit Patra met Finance Minister Nirmala Sitharaman in New Delhi on Wednesday, 20 May and submitted a formal representation calling for structured national deliberations on bringing petrol and diesel under the Goods and Services Tax (GST) framework. The Biju Janata Dal (BJD) MP argued that prevailing economic conditions make a fresh, consultative reconsideration of the issue both timely and necessary.

Constitutional Basis for Inclusion

Patra underscored that Article 279A(5) of the Constitution already contemplates the eventual inclusion of petroleum products within GST, subject to a recommendation by the GST Council. He noted that the Council had previously deliberated on the matter following directions from the Kerala High Court, but no definitive action followed. In his view, the economic landscape has shifted sufficiently to warrant reopening the discussion.

Why Fuel Prices Matter Beyond the Pump

The BJD MP laid out a broad economic case, arguing that fuel prices have cascading effects on inflation, transportation and logistics costs, agricultural input costs, MSME operating expenditure, and household consumption patterns nationwide. He also flagged that persistent interstate disparities in VAT structures continue to undermine the tax-harmonisation and market-integration objectives that GST was designed to achieve.

Drawing on Odisha's profile as a major mining, industrial, and logistics-intensive state, Patra argued that a calibrated GST inclusion could meaningfully lower freight and supply-chain costs, sharpen industrial competitiveness, and deliver tangible relief to farmers, transport operators, and small businesses.

A Phased, Balanced Framework — Not Immediate Inclusion

Notably, Patra did not advocate an abrupt or unconditional shift. Acknowledging states' legitimate concerns over revenue stability — petroleum taxes are among the largest contributors to state finances — he proposed a phased framework that would include a calibrated GST slab structure, transitional compensation support for states, a limited revenue-protection cess mechanism, and a formula-based fiscal stabilisation arrangement during the transition period.

This comes amid a long-running debate in which states have resisted ceding petroleum tax revenues, while industry bodies and consumers have repeatedly called for rationalisation. The Centre has so far deferred the question, citing revenue-sharing sensitivities.

Patra's Recommendations to the Finance Minister

In his representation, Patra requested Sitharaman to facilitate broad-based consultations with all states and to consider constituting a dedicated technical and fiscal working group to examine implementation models and build national consensus on phased integration of petroleum products within the GST architecture. The proposal, if taken up, would require the GST Council — which includes both the Centre and all state finance ministers — to arrive at a collective recommendation.

What Happens Next

There is no official confirmation yet from the Finance Ministry on whether the representation will be placed before the GST Council. Industry observers note that any move on petroleum GST would require extensive political groundwork given the revenue stakes involved for states. The next GST Council meeting will be closely watched for any signal on the issue.