2025 (12) TMI 546 - AAR - GST

No ITC on IGST paid via pre-notice consultation; not valid document under Sections 28(1), 16(2), Rule 36(1)(d)

AAR (Gujarat) held that the applicant is not entitled to ITC of IGST paid pursuant to a pre-notice consultation letter issued under Section 28(1) of the ... ITC on IGST paid against the pre-notice consultation letter under Section 28(1) of the Customs Act, 1962 in terms of the time line prescribed in Section 16(4) of the CGST Act, 2017 - demand is hit by the time limit prescribed in Section 16(4) of the CGST Act or not - HELD THAT:- It is found that neither the pre-consultation letter issued under the Customs Act, 1962 nor the duty paying challan find a mention in either Section 16 (2) of the CGST Act, 2017 or Rule 36 of the CGST Rules, 2017. The applicant's contention is that since Rule 36(1)(d) of the CGST Rules, 2017 prescribed 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, the pre-consultation letter or the document evidencing payment of duty will be covered under the term 'any similar document prescribed under the Customs Act, 1962'. We do not subscribe to this view of the applicant. The similar document mentioned in Rule 36(1)(d) must be read ejusdem generis with the preceding word 'bill of entry'. The similar document that the legislature intended is the Courier Bill of entry and other Declarations/Forms prescribed under the Customs Act, 1962 or rules made thereunder. It cannot be stretched to include a Pre-consultation letter, which is issued prior to issuance of a show cause notice. Similarly, the document evidencing payment of tax such as a challan would also not come within the ambit of a similar document. A pre-consultation letter or a duty paying documents such as a TR-6 challan is not a proper document under Section 16(2) of the Act or under Rule 36 (1) of the Rules, ibid. Which brings us to the next issue i.e. whether such taking of ITC would be hit by the time limit prescribed in Section 16(4) of the CGST Act. As it is already held that ITC cannot be availed on the basis of a pre-consultation letter or a duty paying documents such a TR-6 challan, it is not deemed necessary to answer the corollary to this issue i.e. whether taking of ITC on the basis of a pre-consultation letter or a duty paying documents such a TR-6 challan would be hit by the time limit prescribed in Section 16(4) of the CGST Act. Tamil Nadu Authority for Advance Ruling in Re: M/s. Becton Dickinson India Private Limited [2025 (6) TMI 1232 - AUTHORITY FOR ADVANCE RULING, TAMILNADU] has dealt with a similar issue wherein in compliance with the SVB order, the applicant redetermined the import price involving differential customs duties including import IGST and paid the differential taxes/duties through TR-6 challans. The Authority held 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. Thus, the applicant cannot avail the Input Tax Credit of Rs. 27,14,559/- Integrated Tax paid against the pre-notice consultation letter under Section 28(1) of the Customs Act, 1962. Therefore, the question of applicability of time line prescribed in Section 16(4) of the CGST Act, 2017 is not answered. 1. ISSUES PRESENTED AND CONSIDERED (1) Whether input tax credit is admissible on integrated tax paid as differential IGST pursuant to a pre-consultation letter issued under Section 28(1) of the Customs Act, 1962, when such tax is paid through a duty challan (TR-6) and not by reassessment of the original bill of entry. (2) If such input tax credit were otherwise admissible, whether its availment would be barred by the time limit prescribed in Section 16(4) of the CGST Act, 2017. 2. ISSUE-WISE DETAILED ANALYSIS Issue (1): Admissibility of ITC on differential IGST paid on the basis of pre-consultation letter / TR-6 challan Legal framework discussed (a) Section 16(2)(a) of the CGST Act, 2017 - requiring possession of a tax invoice, debit note, or 'such other tax paying documents as may be prescribed' for entitlement to input tax credit. (b) Rule 36(1) of the CGST Rules, 2017 - prescribing the documents on the basis of which input tax credit may be availed, including under clause (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'. (c) Circular No. 16/2023-Customs dated 07.06.2023 - explaining, post Supreme Court directions, that: * ICES has no functionality to collect additional customs duties on a bill of entry after Out-of-Charge except where there is provisional assessment; such post-OOC payments are made only through TR-6 challan. * Under GST law, the bill of entry for assessment of IGST/Compensation Cess on imports is a prescribed document for ITC; a TR-6 challan is not. * The prescribed procedure, where additional IGST/cess is payable, is to cancel OOC, reassess the bill of entry, pay tax and interest against an electronic challan generated in the Customs EDI system, and then issue a notional OOC so that the revised bill of entry data (including IGST and its date of payment) transmits to the GSTN portal and reflects for ITC as per GST provisions. Interpretation and reasoning (i) The authority bifurcated the applicant's single question into two parts, holding that it must first determine whether any ITC is admissible on the basis of the pre-consultation letter and duty challan, before considering the limitation under Section 16(4). (ii) The pre-consultation letter issued under Section 28(1) of the Customs Act and the TR-6 challan evidencing payment of the differential IGST do not figure as prescribed documents in Section 16(2)(a) of the CGST Act or Rule 36(1) of the CGST Rules. (iii) On the applicant's contention that such documents are covered by Rule 36(1)(d) as 'any similar document' to a bill of entry: * The expression 'any similar document' in Rule 36(1)(d) must be read ejusdem generis with 'bill of entry'. * The 'similar document' contemplated is of the same class as a bill of entry, such as courier bills of entry or other declarations/forms prescribed under the Customs Act or rules 'for the assessment of integrated tax on imports'. * A pre-consultation letter, being a communication issued prior to issuance of a show cause notice under Section 28, is not an assessment document and cannot be equated with a bill of entry or similar assessment document. * Likewise, a duty-paying document such as a TR-6 challan is only a mode of payment and is not a prescribed assessment document for ITC purposes. (iv) With reference to Circular No. 16/2023-Customs, the Tribunal observed that: * Post-OOC additional duty payments via TR-6 challan are not, by themselves, documents that enable availment of ITC under the GST framework. * The only recognised route for the additional IGST to become eligible for ITC is reassessment of the bill of entry by Customs, followed by electronic transmission of the reassessed bill of entry to the GSTN portal so that the increased IGST reflects in GSTR-2B. * In the present case, the applicant did not follow such reassessment procedure; instead, the differential IGST was paid merely against the pre-consultation letter by way of a challan. (v) The authority found support for this view from: * The advance ruling in Re: Mitsubishi Electric India Pvt. Ltd., where ITC on IGST paid as differential customs duty was held inadmissible and questions on time limit and documents were declined once inadmissibility was found. * The ruling in Re: Becton Dickinson India Private Limited, where the Authority (upheld by Appellate AAR) held that neither a TR-6 challan alone, nor a TR-6 challan read with SVB orders or letters, constitutes an eligible document for ITC. Conclusions on Issue (1) (a) A pre-consultation letter under Section 28(1) of the Customs Act is not a prescribed document under Section 16(2) of the CGST Act read with Rule 36(1) of the CGST Rules for availment of ITC. (b) A TR-6 challan or similar duty-paying challan evidencing payment of differential IGST is not a 'bill of entry or any similar document' within the meaning of Rule 36(1)(d), and is therefore not a valid tax-paying document for ITC. (c) Consequently, input tax credit cannot be availed on the differential IGST of Rs. 27,14,559/- paid by the applicant on the basis of the pre-consultation letter and corresponding duty challan. Issue (2): Applicability of time limit under Section 16(4) of the CGST Act to such ITC Interpretation and reasoning (i) The Tribunal noted that this issue is only a corollary to the first, and would arise for consideration only if ITC were otherwise found to be admissible. (ii) Having held under Issue (1) that the applicant is not entitled to ITC on the differential IGST paid on the basis of the pre-consultation letter/TR-6 challan, the Tribunal considered it unnecessary to examine whether any such credit would be hit by the time limit prescribed under Section 16(4) of the CGST Act. (iii) Reliance was placed on the approach adopted in Re: Mitsubishi Electric India Pvt. Ltd., where, once ITC was held inadmissible, the authority declined to answer questions on the limitation and validity of documents for such ITC. Conclusions on Issue (2) (a) Since ITC on the differential IGST itself is held to be inadmissible, the question of applying the time limit under Section 16(4) of the CGST Act, 2017 does not arise and is not answered.