AAAR Denies ITC on IGST Paid via TR-6 Challan for Imports

AAAR Denies ITC on IGST Paid via TR-6 Challan for Imports

Issue: Whether a TR-6 challan, used to deposit differential Integrated Goods and Services Tax (IGST) and Customs Duty after a price adjustment (often due to an SVB order), is a prescribed document under GST law for claiming Input Tax Credit (ITC) under Section 16(2) and Rule 36(1)(d).

Facts:

• The Appellant, M/s. Becton Dickinson India Private Limited (an importer), was subject to Special Valuation Branch (SVB) orders, requiring them to deposit differential IGST and customs duties due to price adjustments post-importation.
• This differential IGST was paid using a TR-6 challan, a treasury payment instrument.
• The Appellant argued that the TR-6 challan, coupled with the SVB order, should constitute a valid document for claiming ITC.
• The GST portal technically disallowed the ITC, leading the Appellant to seek clarity from the AAAR (Appellate Authority for Advance Ruling).

Decision:

The Tamil Nadu Appellate Authority for Advance Ruling (AAAR) ruled that neither a TR-6 challan alone nor a TR-6 challan read with the SVB order is an eligible document for the purpose of availment of ITC under the strict interpretation of Section 16(2)(a) and Rule 36(1)(d) of the CGST Rules.

Key TakeDowns:

• Prescribed Document is Mandatory: Only a Bill of Entry (BoE) or “any similar document prescribed under the Customs Act… for the assessment of IGST on imports” qualifies for ITC. A TR-6 challan is merely a Treasury payment instrument and is not prescribed. * Time Limit on Re-assessed IGST: The AAAR clarified that ITC availment on IGST paid via a re-assessed Bill of Entry is subject to the time limit under Section 16(4) of the CGST Act. The time limit for availing the ITC begins from the date of the re-assessment of the Bill of Entry.
• Re-assessment is the Solution: The AAAR indirectly supported the CBIC Circular (No. 16/2023-Customs) position that if the portal functionality is lacking for TR-6 challans, the taxpayer’s solution is to seek a Bill of Entry-wise re-assessment.
• Strict Interpretation: The order relies on a strict reading of the CGST Rules, confirming that the post-GST regime is less flexible regarding documentation for ITC claims than the pre-GST regime.