TR-6 Challan used for Payment of IGST on Imports, disputed for availing ITC

The Tamil Nadu AAAR in the matter of  In Re: M/s. Becton Dickinson India Private Limited - 2025 (10) TMI 785 - APPELLATE AUTHORITY FOR ADVANCE RULING, TAMILNADU held that neither a TR-6 challan, nor a TR-6 challan read with SVB order and authority letters, is a prescribed document for claiming ITC under Section 16(2) of the CGST Act read with Rule 36(1)(d) of the CGST Rules. The Authority further held that ITC on IGST paid via re-assessed Bill of Entry is governed by the time limit in Section 16(4) of the CGST Act.

Facts:

Becton Dickinson India Private Limited ('the Appellant') is an importer and distributor of goods from overseas group companies, subject to Special Valuation Branch (SVB) orders for arm’s length profit margin adjustments.

For price adjustments post-import, customs authorities at Chennai Air Cargo and Chennai FTWZ required the Appellant to deposit differential IGST and customs duties via TR-6 challan; Chennai Sea allowed re-assessment by Bill of Entry.

The Appellant believed the SVB order and TR-6 challan together constitute a valid tax document for ITC. The Appellant’s grievance was non-recognition on GST portal of IGST paid by TR-6 challan, resulting in denied ITC, had approached AAAR by appeal under Section 101(1) of Tamil Nadu GST Act.

Issues:

• Whether the Applicant/Appellant can avail the ITC of the import IGST paid through TR-6 Challan in terms of Section 16(2) of the CGST Act read with Rule 36 of the CGST Rules?
• Whether the eligibility to avail ITC of the import IGST paid vide TR-6 Challan is subject to the time limit prescribed under Section 16(4) of the CGST Act?

Held:

The Tamil Nadu AAAR in  In Re: M/s. Becton Dickinson India Private Limited - 2025 (10) TMI 785 - APPELLATE AUTHORITY FOR ADVANCE RULING, TAMILNADU held as under:

• Observed that, 'neither a TR-6 challan as such, nor a TR-6 challan read with the SVB order and letters issued by the tax authorities, can be considered as an eligible document for the purpose of availment of ITC' under Section 16(2)(a) of the Act and Rule 36(1)(d) of the CGST Rules.
• Noted that, only a Bill of Entry or “any similar document prescribed under the Customs Act … for the assessment of IGST on imports” qualifies and TR-6 challan is not prescribed under Customs Act, being only a Treasury payment instrument.
• Noted the, CBIC Circular No.16/2023-Customs dated June 7, 2023, holding that TR-6 is not a prescribed ITC document; if functionality for re-assessment in portal is lacking, the solution is to seek Bill of Entry-wise re-assessment.
• Held that, ITC availment on re-assessed Bill of Entry is subject to time limit under Section 16(4) CGST Act; “the time limit for availing ITC on the differential IGST paid would begin from the date of re-assessment of Bill of Entry”.
• Held that, as TR-6 challan cannot be considered an eligible document, the question of time limit for its associated ITC does not arise and dismissed other contentions of the Appellant.

Our Comments:

The order relies on a strict reading of Rule 36(1)(d) CGST Rules and CBIC Circular No.16/2023-Customs dated June 7, 2023, holding that only specified documents (Bill of Entry and documents prescribed under Customs Act for IGST assessment) qualify for ITC on imports.

The decision by the Hon’ble Bombay High Court in Commissioner of Central Excise, Goa Versus Essel Propack Ltd. and others - 2015 (5) TMI 529 - BOMBAY HIGH COURT had held that, “in terms of clause (e) of sub-Rule (1) of Rule 9, of the Cenvat Credit Rules of 2004, a challan evidencing payment of service tax was a specified document for the purpose of availing service tax credit and the entities listed in clauses (i), (ii), and (iv) of Rule 2 of the Service Tax Rules, 1994 can take the service tax credit on the strength of such challan…. If no documents have been mentioned, TR 6 challan has to be considered as a proper document, reflecting payment of such tax.”

However, the TN AAAR had differed from this stance citing the difference between the pre-GST and post-GST regimes.

Relevant Provisions:

Section 16(4), CGST Act, 2017

“(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the thirtieth day of November following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier.”

Rule 36(1)(d) of the CGST Rules, 2017

Rule 36. Documentary requirements and conditions for claiming input tax credit.-

“(1) The input tax credit shall be availed by a registered person, including the Input Service Distributor, on the basis of any of the following documents, namely,-

(d) a bill of entry or any similar document prescribed under the Customs Act, 1962 or rules made thereunder for the assessment of integrated tax on imports.”

CBIC Circular No. 16/2023-Customs, dated June 07, 2023

“5.1 The matter has been examined in the Board for purpose of carrying forward the Hon’ble Supreme Court’s directions. It is noted that –

(a) ICES does not have a functionality for payment of customs duties on a bill of entry (BE) unless it has been provisionally assessed after giving the Out-of-Charge (OOC) to the goods. In this situation, duties can be paid only through a TR-6 challan.

(b) Under GST law, the BE for the assessment of integrated tax/compensation cess on imports is one of the documents based on which the input tax credit may be availed by a registered person. A TR-6 challan is not a prescribed document for the purpose.

(c) The nature of facility in Circular No. 11/2015-Cus. for suo motto payment of customs duty in case of bona fide default in export obligation is not adequate to ensure a convenient transfer of relevant details between Customs and GSTN so that ITC may be taken by the importer...

5.2 Keeping above aspects in view, noting that the order of the Hon’ble Court shall have bearing on importers other than the respondents, and for purpose of carrying forward the Hon’ble Court’s directions, the following procedure can be adopted at the port of import (POI) –

(a) For the relevant imports that could not meet the said pre-import condition and are hence required to pay IGST and Compensation Cess to that extent, the importer not limited to respondents may approach the concerned assessment group at the POI with relevant details for purposes of payment of the tax and cess along with applicable interest.

(b) The assessment group at POI shall cancel the OOC and indicate the reason in remarks. The BE shall be assessed again so as to change the tax and cess, in accordance with the above judgment.”

 (Author can be reached at [email protected])