Auto industry seeks resolution from government for ₹2,500 crore GST compensation cess credit lapse

According to sources, representatives of the auto industry are understood to have raised the issue of compensation cess credit of Rs 2,500 crore arising from the GST 2.0 regime with the government in its pre-budget meeting.

Representatives of the auto industry, including the Society of Indian Automobile Manufacturers (SIAM), raised the issue in a meeting with Finance Minister Nirmala Sitharaman and senior officials on Tuesday and sought resolution of the matter citing genuine concerns of dealers, who are mostly small and medium enterprises, a person aware of the development said.

Accumulated compensation cess got phased out on September 22 with the implementation of the new GST norms.

In October this year, the Federation of Automobile Dealers Associations (FADA) moved the Supreme Court seeking relief from compensation cess credit of over Rs 2,500 crore.

FADA had then claimed that approaching the Supreme Court was “not against reforms, but for fairness and trust” as thousands of MSME auto dealers were suffering losses and “the genuine, tax-paid compensation cess credit of Rs 2,500 crore is now at risk of being wiped out”.

Dealers’ concerns stem from the unutilized compensation cess balance held in their books, which cannot be carried forward under the revised GST framework. The industry body had earlier appealed to Prime Minister Narendra Modi to help deal with the issue of compensation cess.

Apart from the compensation cess issues, auto industry players also discussed ease of doing business and issues arising on GST portal with government officials in the meeting.