SC lifts ban on large diesel cars in Delhi-NCR, slaps 1% green tax

The Supreme Court on Friday lifted its order banning registration of diesel-run SUVs and other vehicles with engine capacity of 2,000cc and above in Delhi-NCR and allowed these to be reregistered on payment of a green tax equivalent to 1 per cent of the vehicle's ex-showroom price.

The apex court has said that such vehicles may be allowed to be registered again on payment of one per cent of ex-showroom price as environment tax, thereby implementing the 'polluter pays' principle to curb air pollution.

A special bench headed by Chief Justice TS Thakur directed carmakers or dealers to deposit the 1 per cent 'Environment Compensation Charge' with the Central Pollution Control Board (CPCB).

The bench said it was open to hearing arguments on extending the ECC to diesel cars with less than 2,000 cc engine capacity as well.

The suggestion of a 1 per cent ECC on diesel cars originally came from Mercedes, which uses diesel engines in most of its luxury cars. Lifting of the ban on fresh registration of heavy diesel cars, however, comes as a big relief to the industry as a whole.

Automobile giants like Mercedes, Toyota, Mahindra and General Motors had moved the apex court for modification of the order by which registration of their high-end diesel vehicles was barred in Delhi and NCR.

The bench's decision to modify its 16 December 2015 order banning fresh registration of diesel cars with 2,000cc and above engine capacity came after manufacturers and dealers agreed to convey to buyers that the ECC payment would be a ''condition precedent'' for registration.

The bench, also comprising Justices AK Sikri and R Banumathi, recorded the submission of amicus curiae and senior advocate Harish Salve that registration of these categories of cars should not be done until the ECC payment receipt is produced before the registration authority.

''Registration shall be done only after the authority satisfies itself upon the deposit of the ECC amount,'' Chief Justice Thakur observed in the order.

The CPCB (Central Pollution Control Board) has been directed to open a separate bank account for ECC deposits.

The court left the decision on the ECC rate to the transport authorities but said that such an increase should not be done retrospectively.

''Let us first get used to 1 per cent ECC. We do not want the sword of a higher charge hanging over them at this moment,'' Chief Justice Thakur said.

The court's decision to modify its 16 December order, however, clashes with the central government's stand that courts do not have the authority to levy such charges, and that such authority vests solely with the executive.