With the diesel car registration ban on vehicles over 2000cc, many manufacturers felt the court should review the ban.
The Supreme court gave an indication that the ban might be removed in the NCR (National Capital Region) by accepting the auto majors offer to deposit an one percent green cess on the vehicle's ex-showroom price.
Chief Justice T S Thakur and Justices A K Sikri and R Banumathi said, "If you (automobile manufacturers) deposit on the sale of each big diesel car a green cess of 1 percent on the ex-showroom cost of the vehicle, you can sell as many as you want."
However, there is still a controversy on levying the cess on big diesel cars on the principle of 'polluter pays' seemed to have settled, the central government has raised two fundamental objections.
The objections raised is that the court did not have the jurisdiction to levy tax since it fell within the domain of the government and second being that the court's perception of 'diesel is evil' is not right.
Attorney general Mukul Rohatgi said, "The likely imposition of green cess for diesel cars of more than 2000cc engine capacity will not be in consonance with the constitutional scheme of things in terms of Article 265 of the Constitution of India that 'no tax can be levied without the authority of law' and such cess must be imposed through legislation by authority of Parliament.
"Therefore, imposition of green cess without legislative mandate would be in contravention of the constitutional mandate, especially when duties and taxation on diesel cars are already in place."
The AG has asked for six weeks to conduct a detailed study on the various issues related to the polluting, utilization of subsidized fuel and SUVs, and arrive at a conclusion on the amount needed to be levied on diesel vehicles.
The bench has agreed to the study, however, it also said, "The Supreme Court had come to the rescue of people in the 1990s by ordering conversion of the entire city transport into CNG mode. If it had not done so, people would have found it difficult to breathe and live in Delhi. The government must not be seen to be opposing the court's green move against vehicles which are perceived to be polluting."