2025 (10) TMI 785 - AAAR - GST

TR-6 treasury challan not valid for ITC; IGST via reassessed bill of entry eligible subject to Sec 16(4)/20 time limit

In Re: M/s. Becton Dickinson India Private Limited

AAAR held that import IGST paid via a TR-6 challan is not an eligible document for ITC because a TR-6 is a treasury instrument not equivalent to a bill of ... Eligibility to avail ITC - import IGST paid through TR-6 Challan in terms of Section 16(2) of the CGST Act read with rule 36 of CGST Rules - import IGST paid vide TR-6 Challan is subject to the time limit prescribed under Section 16(4) of the CGST Act - import IGST paid vide re-assessed bill of entry is subject to the time limit prescribed under Section 16(4) of the CGST Act - time limit for availing ITC would begin from the initial date of bill of entry originally filed or from the date of re-assessment of bill of entry. Whether the Applicant 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 CGST Rules? - HELD THAT:- Apart from the other documents prescribed under rule 36(1) for the purpose of availment of ITC, ‘a bill of entry or any similar document’ also figures as one of the documents under sub-clause (d) to Rule 36(1). In this regard, we observe that though the phrase “any similar document” occupies center-stage along with the term “Bill of Entry” under the said sub-clause, the presence of other phrases, viz., ‘prescribed under the Customs Act, 1962 or rules made thereunder’, and ‘for the assessment of integrated tax on imports’ clearly brings in a restriction, purpose and the legislative intent behind the framing of said sub-clause. The payment of differential duties of customs including IGST for import by the applicant in the instant case, is a fall-out of the suo-motu declaration of price revision (of the foreign supplier) by the appellant. The said fact has duly been considered and acknowledged by the Department by way of SVB Order dated 27.02.2015 issued the Deputy Commissioner of Customs, SVB, New Delhi, which further stands renewed vide order dated 11.06.2018. Further, we observe that in the instant case, the transaction involving import of goods that has already been assessed to duties of Customs including IGST, is being subjected to re-assessment whenever upward price revision takes place between the applicant and the foreign supplier who happen to be a related party - irrespective of the fact whether the differential duties of customs and Integrated taxes on import gets paid under a re-assessed bill of entry, or, by way of TR-6 challans, it amounts to ‘assessment’ as defined under Section 2(2) of the Customs Act, 1962. TR-6 challan is not a document prescribed under the Customs Act or the rules made thereunder, and we find that a TR-6 challan is a document prescribed under the Treasury Rules of the Central Government’, under which any person can pay money into the treasury or Bank on Government Account. It is further observed that as far as the taxation law including the Customs Act, 1962 is concerned, it is nothing but a tool to transfer money to Government Account, and apart from the nature of duties/taxes paid, and the relevant code/heads of account, it does not contain all the details relating to assessment encapsulated in a ‘bill of entry’ - the contention of the appellant about a TR-6 challan to be treated as a document similar to a ‘Bill of Entry’ or a ‘TR-6 challan along with the SVB order and letter issued by the tax authorities to pay duty under Section 28(1)(b) of Customs Act’, to be treated as a document similar to a ‘Bill of Entry’, lacks legal backing and is not sustainable. There is a noticeable difference in the pre-GST legal provisions as compared to GST provisions, which is due to the fact that the dynamics involving the transmission of the duties of customs including IGST, Cess, etc., to the GSTN portal, so as to enable the same to be available for the claim of ITC, was not a pre-requisite in the pre-GST era - the case laws relied upon by the appellant, especially relating to the pre-GST period, do not have any relevance to the instant case. As it is clear that a TR-6 challan as such, or a TR-6 challan read with the SVB order and letters issued by the tax authorities, cannot be considered as a document similar to a ‘Bill of Entry’ and since they are not the prescribed document under the Customs Act, 1962 or the rules made thereunder, we are of the considered opinion 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 as claimed by the applicant, can be considered to be an eligible document for the purpose of availment of ITC. 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 THAT:- The question of answering this query does not arise, having already held that TR-6 challan as such, or a TR-6 challan read with the SVB order and letters issued by the tax authorities, cannot be considered as an eligible document for the purpose of availment of ITC. Whether the eligibility to avail ITC of the import IGST paid under the re-assessed bill of entry is subject to the time limit prescribed under Section 16(4) of the CGST Act? - HELD THAT:- The Bill of Entry’ figures as one of the prescribed document for the purposes of availment of ITC, under rule 36(1)(d) of the CGST Rules, 2017, as a result of which, availment of ITC based on a ‘Bill of entry’ becomes eligible. The provisions of 16(4) of the CGST Act, 2017 that prescribes the time frame for availment of ITC refers just to an invoice or a debit note, in view of the fact that the levy enabled under Section 9 of the Act, ibid, is only in respect of ‘intra-state’ supplies of goods or services or both. As one may be aware, only a Bill of Entry’ is relatable to import of goods involving payment of taxes under IGST. Accordingly, by virtue of Section 20 of the IGST Act, 2017, whereby the provisions of CGST Act, 2017, becomes applicable ‘mutatis mutandis’ in relation to Integrated tax, it is inferred that the time limit prescribed under the provisions of Section 16(4) of CGST Act, 2017, applies in equal measure to the availment of ITC based on a ‘Bill of Entry’ in relation to Integrated taxes, as much as it applies to availment of ITC based on an invoice or debit note in relation to Central tax. A taxing statute must be read as it is with no additions and no subtractions on the grounds of legislative intendment or otherwise, it also becomes necessary to consider the requisite changes/interpretation, when the IGST Act, 2017, through Section 20 of the Act, ibid, seeks to borrow the provisions in relation to ‘Input Tax Credit’ of the CGST Act, 2017. Appeal dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether import IGST paid through a TR-6 challan, either alone or read with the Special Valuation Branch (SVB) order and Customs authorities' letters, constitutes an eligible 'tax paying document' under Section 16(2) of the CGST Act read with Rule 36(1)(d) of the CGST Rules for availing input tax credit (ITC). 2. Whether eligibility to avail ITC of import IGST paid via TR-6 challan is subject to the time limit prescribed under Section 16(4) of the CGST Act. 3. Whether ITC of import IGST paid on the basis of a re-assessed bill of entry is subject to the time limit prescribed under Section 16(4) of the CGST Act, and if so, whether the time runs from original bill of entry or from the date of re-assessment (the last sub-question was not appealed and therefore not considered afresh). ISSUE-WISE DETAILED ANALYSIS - Issue 1: TR-6 challan (alone or with SVB order/letters) as an eligible document for ITC Legal framework: Section 16(2)(a) CGST Act requires possession of a tax invoice or such other tax-paying documents as may be prescribed. Rule 36(1)(d) CGST Rules expressly includes 'a bill of entry or any similar document prescribed under the Customs Act ... for the assessment of integrated tax on imports.' Customs Act defines 'assessment' and prescribes certain documents (e.g., bill of entry) under specific sections. Precedent treatment: Appellant relied on pre-GST decisions and prior regime analogies where documents not expressly listed were accepted for credit; administrative and judicial pronouncements addressing practical difficulties (including a CBIC Circular addressing TR-6 usage where BE re-assessment post Out-of-Charge is system-restricted) were also invoked. The AAR and Appellate Authority preferred post-GST statutory scheme and the circulars' guidance on process over pre-GST analogies. Interpretation and reasoning: The phrase 'bill of entry or any similar document prescribed under the Customs Act ... for the assessment of integrated tax on imports' was read conjunctively: (i) the document must be similar in content/purpose to a bill of entry (containing particulars of assessment/payment), and (ii) it must be a document prescribed under the Customs Act or rules made thereunder. A TR-6 challan is a treasury/payment instrument prescribed under Treasury Rules, not a document prescribed under the Customs Act for assessment; it lacks the assessment particulars embedded in a bill of entry. Even when read together with SVB orders and Customs letters, those documents do not convert TR-6 into a Customs Act-prescribed assessment document akin to a bill of entry. The CBIC circular acknowledging operational constraints (ICES/ OOC issues) was held to be relevant for procedure (suggesting re-assessment and notional OOC to enable transmission), but it does not alter the statutory classification of TR-6. Ratio vs. Obiter: Ratio - TR-6 challan, whether alone or read with SVB order and Customs letters, is not a 'bill of entry or any similar document prescribed under the Customs Act' and therefore is not an eligible Rule 36(1)(d) document for availing ITC. Observations on the applicability of the CBIC circular and distinctions from pre-GST jurisprudence are explanatory (supporting ratio) rather than departing from core statutory interpretation. Conclusion: A TR-6 challan, either alone or coupled with SVB orders and Customs communications, is not an eligible tax-paying document under Section 16(2) read with Rule 36(1)(d) for claiming ITC of import IGST; the AAR's conclusion to that effect is upheld. ISSUE-WISE DETAILED ANALYSIS - Issue 2: Applicability of Section 16(4) time limit to ITC claimed via TR-6 challan Legal framework: Section 16(4) CGST Act prescribes the outer time limit for taking ITC 'in respect of any invoice or debit note' (the thirtieth day of November following the end of the financial year to which the invoice/debit note pertains or furnishing of the relevant annual return, whichever is earlier). Rule 36 distinguishes invoices/debit notes from other prescribed documents (e.g., bill of entry). Precedent treatment: Appellant relied on pre-GST precedents and administrative circulars to argue against application of the statutory time bar to non-invoice documents; AAR and Appellate Authority relied on the structure of CGST/IGST Acts and mutatis mutandis application to conclude otherwise. Interpretation and reasoning: Since the Appellate Authority has held that TR-6 challans (alone or with SVB/letters) are not eligible documents under Rule 36(1)(d), the question whether Section 16(4) applies to ITC based on TR-6 does not arise. Procedurally and substantively, Section 16(4) on its face limits credit in respect of invoices and debit notes; the issue of time limitation for TR-6 would be moot given non-eligibility status. The CBIC circular's procedural fixes do not convert TR-6 into an eligible document nor negate the question's non-relevance once non-eligibility is established. Ratio vs. Obiter: Ratio - Because TR-6 is not an eligible document for ITC, the applicability of Section 16(4) to TR-6 payments is not relevant; this is dispositive for the second issue. Observations distinguishing invoices/debit notes from other documents under Section 16(4) are part of the ratio. Conclusion: The question whether Section 16(4) applies to ITC claimed via TR-6 challan is academic given TR-6's non-eligibility; AAR's decision that the question does not arise is affirmed. ISSUE-WISE DETAILED ANALYSIS - Issue 3: Applicability of Section 16(4) to ITC on re-assessed bill of entry Legal framework: Section 16(4) prescribes the outer time limit for credit 'in respect of any invoice or debit note'; Rule 36(1)(d) expressly includes a 'bill of entry or any similar document prescribed under the Customs Act ... for the assessment of integrated tax on imports.' Section 20 IGST Act and Rule 2 IGST Rules apply CGST provisions mutatis mutandis to integrated tax matters. Precedent treatment: Appellant invoked pre-GST case law and administrative circulars to argue non-application of the Section 16(4) time bar to bills of entry. The AAR and Appellate Authority applied the mutatis mutandis principle to conclude that the time bar applies to ITC claimed on import IGST evidenced by bills of entry. Interpretation and reasoning: The Appellate Authority reasoned that when CGST provisions relating to input tax credit are made applicable to IGST 'mutatis mutandis' under Section 20 IGST Act, necessary adaptations include treating bills of entry (the import assessment document) as the equivalent category to invoices/debit notes for import IGST. The legislative architecture shows that: (i) CGST's Section 16 limitation is directed at invoices/debit notes for intra-state supplies; (ii) for imports/inter-state items, IGST provisions borrow CGST input credit rules with necessary changes so that the limitation attaches to the appropriate import document (i.e., bill of entry or similar document). The statutory scheme, structure of Section 16(4), and the need for an outer limit for ITC together support applying the limitation period to re-assessed bills of entry. Reliance on the doctrine that legally enforceable causes of action attract limitation (as applied in analogous prior decisions) bolsters the position that re-assessed bills of entry are subject to the Section 16(4) timeline. Ratio vs. Obiter: Ratio - Section 16(4) limitation applies, mutatis mutandis via Section 20 IGST Act and Rule 2 IGST Rules, to availment of ITC based on a bill of entry (original or re-assessed); this is a binding part of the decision. Comparative and policy comments regarding pre-GST differences and the CBIC circular are explanatory. Conclusion: ITC claimed on the basis of a re-assessed bill of entry is governed by the time limit prescribed under Section 16(4) CGST Act (as applied mutatis mutandis to IGST matters); the AAR's view on this point is affirmed. DISPOSITIONAL CONCLUSION The Appellate Authority upholds the AAR ruling: (i) TR-6 challan, alone or read with SVB order and Customs letters, is not an eligible Rule 36(1)(d) document for ITC; (ii) the question of Section 16(4)'s applicability to TR-6 does not arise; and (iii) ITC based on a re-assessed bill of entry is subject to the time limit under Section 16(4) (applied mutatis mutandis to IGST). The advance ruling is therefore affirmed and the appeal dismissed.