Input credit time limit in case of import (Bill of entry)

[sunilkumar bhageria]

Wether same time limit for taking input credit is applicable in case of Imports vide bills of entry i.e. filing of return of Sept. or annual return whichever is earlier or there is no time limit to claim input credit of IGST paid on imports (Bill of entry)

[Pratik Trivedi]

Dear All,

I have gone through all the expert’s views and with due respect to all I would like to add my view point to the subject matter.

We had learned from various judicial canon that the legislature never waste its words and he knows what he writes and Expressio Unius Est Exclusio Alterius.

In the present context we must read Section 2(38), 2(66), 16(2)(a) and Section 16(4) of CGST Act, 2017 which reads as ;

Section 2(38) “debit note” means a document issued by a registered person under sub-section (3) of section 34;

Section 2(66) “invoice” or “tax invoice” means the tax invoice referred to in section 31;

Section 16(2)(a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;5

Section 16(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 due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier……………..

On perusal of above provisions it could be observed that at one place of very same section legislature takes a pain to mention “such other tax paying documents as may be prescribed” and by the time he reaches the end of section he left out the very same words i.e. “such other tax paying documents as may be prescribed”.

There is a view that Tax on Import of goods are governed by the IGST Act and that’s why the Section 16(4) of CGST Act, 2017 doesn’t contain Bill of entry specifically there which personally doesn’t float my interpretation ideology. Further it’s to be apprehended that Tax on Import of Goods flows from Custom Tariff Act, 1975 which I have discussed in later part of this discussion.

In that regard I would like to mention that the concept of Bill of Entry is not alien to the CGST Act, 2017. Under the CGST Act, 2017 the ITC of Tax paid on import of goods i.e. IGST is allowed and in that regard we can refer to the Section 2(62)(a) of CGST Act, 2017 which reads as

"input tax" in relation to a registered person, means the central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes ……..

(a) the integrated goods and services tax charged on import of goods;

and in order to allow such ITC under the CGST Act, 2017 the Section 16(2)(a) specifically make mention of the words “such other tax paying documents as may be prescribed” and accordingly spelt out at Rule 36(1)(d) of CGST Rules, 2017 the Bill of Entry or any similar documents as prescribe under the Customs Act, 1962 as one the documents eligible for availing the ITC.

Now let’s go to the Section 20(iv) of IGST Act, 2017 which provides that Subject to the provisions of IGST Act, 2017 and the rules made thereunder, the provisions of CGST Act, 2017 relating to Input Tax Credit shall, mutatis mutandis, apply, so far as may be, in relation to integrated tax as they apply in relation to central tax as if they are enacted under this Act.

Under this circumstances the concept of the word “mutatis mutandis” needs quite deliberation to determine whether in the context of Section 16(4) of CGST Act, 2017 the same could be modified by importing and adding a new word and read as “any invoice or debit note or bill of entry………”

The rule of mutatis mutandis is a rule of adaption and allow the changes according to the context in the point of details and alteration to the words when necessary to suit the objective.

However in the present context the word “Bill of Entry" itself holds an equal important under the CGST Act, 2017 and in spite of that fact the same have been ignored under Section 16(4) of CGST Act, 2017 which could be unintended drafting error but such errors could not be rectified in guise of mutatis mutandis under the IGST Act, 2017. The concept of mutatis mutandis cannot extend the scope and power beyond the one originally envisaged under the referred legislation. Section 20 of IGST Act, 2017 cannot get a better title than what is held by 16(4) of CGST Act, 2017.

Further the tax on import of goods is being levied under the Section 3(1) of Custom Tariff Act 1975 let us review the levy under IGST Act, 2017 in the context of import of goods which reads as under ;

Section 5(1) of IGST Act, 2017 - Subject to the provisions of sub-section (2), there shall be levied a tax called the integrated goods and services tax on all inter-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 of the Central Goods and Services Tax Act and at such rates, not exceeding forty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person:

Provided that the integrated tax on goods imported into India shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 on the value as determined under the said Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962.

Now let’s review the Section 3(7) of the Custom Tariff Act, 1975 which reads as ;

Section 3(7) Any article which is imported into India shall, in addition, be liable to integrated tax at such rate, not exceeding forty per cent. as is leviable under section 5 of the Integrated Goods and Services Tax Act, 2017 on a like article on its supply in India, on the value of the imported article as determined under sub-section (8)."

If we would compare the same with Section 3(1) of Custom Tariff Act, 1975 which reads as ;

"Section 3(1) Any article which is imported into India shall, in addition, be liable to a duty (hereafter in this section referred to as the additional duty) equal to the excise duty for the time being leviable on a like article if produced or manufactured in India and if such excise duty on a like article is leviable at any percentage of its value, the additional duty to which the imported article shall be so liable shall be calculated at that percentage of the value of the imported article:”

then we would appreciate the fact that the very difference in both above provisions are that unlike Section 3(1) the levy of IGST under Section 3(7) is itself a levy and not any equivalent to other taxes or duty.

So according to me and to the best of my understanding and knowledge the school of thought that the barriers of time limit for availing the ITC under Section 16(4) of CGST Act, 2017 doesn’t apply in case of Import of Goods for the very reason that same doesn’t find any mention therein. This is my personal views and I respect absolutely views of all the scholars.

This could be an unintended drafting error but that won’t change the consequences. I would like to quote Oliver Wendell Homes Jr once said in his court “This is a Court of Law and not a Court of Justice” which I believe to be in line with literal interpretation which may have harsh consequences on either side.

[Vishal Garge]

I agree with Mr. Prateek.

[R R]

@Pratik Trivedi - Brilliant analysis.

[SAURABH DIXIT]

I agree with @pratik. In fiscal law, there is no scope for intendment. Someone rightly stated that IGST paid on import is a customs duty, which is allowed as ITC under GST law. IGST Act merely suggests which GST to be paid on import, i.e. igst or cgst/sgst. That is the limited role, according to me. Also, when a restriction is created in law (itc to be taken within specified time), the embargo is attracted only when the subject falls within four corners thereof and not through any indirect analogy. If Section 16(4) specifically uses term Tax invoice / Debit Note, and since there is no deeming fiction in law which states that BE is nothing but Tax Invoice or Debit Note for GST law purposes, one has to consider the embargo to be inapplicable to BE. Of course, during erstwihle CCR, 04 regime, there are case laws which state that Rule 9(1)(b) embargo (not availablity of credit in case where differential duty paid due to fraud, supression etc) applies even when credit is availed on BE, apart form supplementary invoice, however, present issue stands on a different footing, and with differently worded text in statute.

In a nut shell, unless law specifically states so, time limit to take ITC should not legally apply to ITC avialed on BE, since it is not Tax invocie or Debit Note.

AI Summary

Time limit for input tax credit: whether import bills of entry fall within the CGST time bar affects claiming IGST credit.
The central question is whether the CGST time bar on availing input tax credit for invoices and debit notes also applies to IGST paid on imports via a bill of entry. One view reads IGST provisions and CGST rules together, and Rule 36's listing of bill of entry as a prescribed document, to apply the time limit to import credits. The contrary view relies on the express textual omission of bills of entry from the CGST time bar provision and treats bills of entry as distinct customs documents, arguing the embargo does not apply absent an express deeming provision. Practically, taking credit late may invite challenges; advance ruling or litigation are practical options.