In Brief
In June 2006, India's central government increased petrol and diesel prices, which triggered an ad valorem increase in VAT. Delhi's government issued a relief measure exempting the price increase component from VAT calculation, meaning VAT would continue on pre-increase prices. When prices later rolled back (partially in November 2006, fully in February 2007), oil companies argued the exemption should persist indefinitely in quantified form. The Supreme Court held the exemption applies only while the price increase exists—once prices revert, the exemption ceases. The benefit was designed to protect consumers from enhanced VAT on that specific increase, not provide permanent deduction. Appeals dismissed.
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