The Tamil Nadu Appellate Authority for Advance Ruling (‘the AAAR’) has upheld the ruling of the Tamil Nadu AAR (‘the TNAAR’) wherein it was clarified that the Input Tax Credit (‘ITC’) on the IGST paid through TR-6 challan cannot be availed, as the same cannot be considered as an eligible document in terms of Section 16(2) of the CGST Act.

Facts:

• The Appellant imported goods from its overseas group companies and paid customs duties along with applicable IGST as per the Bills of Entry (BOEs) filed. Subsequently, in accordance with the vendor agreement, the Appellant paid additional consideration to the vendor, which resulted in the payment of additional customs duties and applicable IGST
• In some cases, the Appellant paid the differential duty and IGST through TR-6 challans, as per the instructions and orders of the Customs authorities. In other cases, the additional duties were paid through re-assessment of the BOE’s
• The Appellant approached the TNAAR seeking clarification on the availment of ITC of the differential IGST paid through TR-6 challans wherein it was held that the Appellant cannot avail ITC on the basis of said document as the same cannot be considered as an eligible document
• Aggrieved by the ruling of the TNAAR, the Appellant filed an appeal before the AAAR

Issue before the AAAR:

1. Whether the Appellant can avail the ITC of the  additional IGST paid on import of goods through TR-6 Challan in terms of Section 16(2) of the CGST Act read with Rule 36 of the CGST Rules?
2. Whether the eligibility to avail ITC of the additional IGST paid vide TR-6 challan is subject to the time limit prescribed under Section 16(4) of the CGST Act?
3. Whether the eligibility to avail ITC of the IGST paid vide the reassessed bill of entry is subject to the time limit prescribed under Section 16(4) of the CGST Act?
4. If the answer to Q.3 for the bill of entry is in affirmative, would the time limit for availing ITC begin from the initial date of the bill of entry originally filed or from the date of reassessment of the bill of entry?

Discussion and Ruling:

• With respect to the first query regarding availment of ITC of the import IGST paid through TR-6 challan, the AAAR held that ITC is not admissible as a TR-6 challan is merely a treasury document for payment into the Government account. Accordingly, it is not a document prescribed under the Customs Act, 1962 or the rules made thereunder similar to bill of entry.” The AAAR further emphasized that Rule 36(1)(d) permits ITC on the basis of a bill of entry or a similar document prescribed under the Customs Act, and since a TR-6 challan does not meet this criterion, it cannot be treated as an eligible document for availing ITC
• The second query regarding time limit in case of availment of ITC on the basis of TR-6 challan was held to be redundant

With respect to the third and fourth query regarding applicability of time period prescribed under Section 16(4) on ITC availed via re-assessed bills of entry, the AAAR observed that though Section 16(4) refers only to invoices and debit notes, however, by virtue of Section 20 of the IGST Act applying CGST provisions mutatis mutandis, the same restriction extends to Bills of Entry as well. Since a Bill of Entry is a prescribed document under Rule 36(1)(d), ITC on IGST paid through it, whether original or re-assessed, must be claimed within the statutory deadline of 30 November following the end of the financial year or filing of the annual return, whichever is earlier.

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