The Supreme Court of India has admitted a petition by the Federation of Automobile Dealers Associations (FADA) concerning more than Rs 2,500 crore in blocked compensation cess credits that became unusable after the implementation of GST 2.0. The court has scheduled the next hearing for March 25 2026 and is considering a transitional mechanism to allow these credits to be offset against other GST liabilities. The case could set a precedent for handling legacy tax credits during indirect tax reforms.
FADA claims that more than Rs 2,500 crore in compensation cess credits are blocked.
The next hearing is scheduled for March 25 2026.
GST 2.0 removed the compensation cess and reduced GST rates on several vehicle categories, making the credits unable to offset future liabilities.
FADA is seeking a transitional mechanism that would allow unused compensation cess credits to be adjusted against other GST liabilities.
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The Hindu · 14 days ago
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