Automobile dealers seek govt intervention in compensation cess recovery

Automotive dealer's body FADA has written to Finance Minister Nirmala Sitharaman seeking help regarding the levy and treatment of cess balances.

In a letter to the minister, the Federation of Automobile Dealers Associations (FADA) noted that while GST 2.0 subsumes the earlier compensation cess regime for automobiles, the dealers today hold significant, validly-availed cess balances in their electronic credit ledgers.

Once no further cess liability arises, these balances cannot be utilised against CGST/SGST/IGST under the current law, FADA President C S Vigneshwar said.

Without a transitional pathway, credits risk lapsing, creating an unintended, permanent loss and a sharp working-capital shock for compliant MSME dealerships, he added.

With the 56th GST Council decision, the levy of compensation cess on motor vehicles has been subsumed into GST rates, and hence no fresh cess liability will arise on outward supplies, he said.

Vigneshwar sought that the balance lying in the compensation cess credit ledger as on September 21 be transferred to the IGST/ CGST credit ledger.

Besides, such a balance may then be utilised for discharge of regular GST liability, he added.

"Our members are extremely anxious on this matter as we enter the festive season. We hence request you (Sitharaman) to mark this issue with high importance and also urge you with a positive response," he said.

In view of this pressing concern among members, the industry body respectfully requests an urgent appointment, he added.