Rule 37 applicable for IGST paid on import of goods?

[Nandan Khambete]

Will Rule 37 apply to ITC claimed of IGST paid on Iort of goods appearing in Bill of entry ? This is w.r.t 180 days rule - 2nd provisio in Section 16(2)(d).

[Nandan Khambete]

Rule 37 is applicable.

[Amit Agrawal]

In my personal view, restrictions prescribed in second proviso u/s 16 (2) does NOT apply to ITC availed against bill of entry for IGST paid while importing goods into India.

[KASTURI SETHI]

By virtue of Section 20 of IGST Act, the provisions relating to 'Input Tax Credit' laid down in Section 16 of CGST Act are applicable to IGST Act. Refer clause (iv) of Section 20 of IGST Act.

" ------------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 :"

[Amit Agrawal]

I agree with Shri Kasturi Sethi Ji w.r.t. legal proposition put by him.

Kindly allow me to elaborate my reasoning behind my views:

A. Subject proviso - under discussion here - reads as follows:

"Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed:"

B. Said proviso requires payment of 'the value of supply along with tax payable thereon' to the supplier. Against import of goods, liability to pay IGST (along-with applicable custom duties) lies with the importer (i.e. recipient of goods, in context of discussion here). So, tax-payer does not pay "tax payable thereon" to the supplier. This is one of the reason - I feel - that restrictions put in subject proviso is not applicable in given situation.

C. More importantly, said proviso deals with a situation where supplier had issued "invoice". In terms of Section 2 (66), “invoice” or “tax invoice” means the tax invoice referred to in section 31.

C1. In given situation, the supplier never issues any such "invoice".

C2. Differences between "invoice" and 'bill of entry (or any similar document prescribed under the Customs Act, 1962" can also be noted from various sub-clauses of rule 36 (1) where it can be seen that these are two different documents against which tax-payer can avail ITC.

D. Summarizing above, subject proviso deals with a situation where tax-paper has availed ITC against "invoice" issued by the supplier showing "the value of supply along with tax payable thereon" where liability to pay taxes stated therein lies with the supplier.

D1. By virtue of Section 20 (iv) of IGST Act, restrictions of subject proviso is equally applicable in a situation explained in Para D above (which is what said proviso states & nothing more) while availing any ITC (i.e. SGST, CGST as well as IGST) under IGST Act.

Hence, in my humble view, restrictions prescribed in second proviso u/s 16 (2) does NOT apply to ITC availed against bill of entry for IGST paid while importing goods into India.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion. I fully respect contrary views.

[Nandan Khambete]

Dear Sirs,

Thank you for your views. The intention may not be to apply Rule 37 / 2nd proviso to Section 16(2) in such cases but it is not clearly spelt out in drafting of the law. Proviso mentions word "Invoice" while Section 31 mentions word "Tax Invoice". I referred with few Departmental officers and they are of view that Rule 37 is applicable for IGST paid on import of goods. Let's see how this unfolds.

[Amit Agrawal]

Section 2 (66) covers invoice as well as tax-invoice.

W.r.t. dispute is concerned, I guess that it can be settled only through judicial process - one way or other - probably only at tribunal level or above.

AI Summary

Debate on Rule 37's Application to IGST Input Tax Credit on Imports Under Section 16(2)(d) of GST Act A discussion forum addressed whether Rule 37 applies to Input Tax Credit (ITC) claimed for Integrated Goods and Services Tax (IGST) paid on imported goods as per the second proviso in Section 16(2)(d) of the GST Act. One participant argued that Rule 37 applies, while another contended that the restrictions do not apply to ITC availed against a bill of entry for IGST, as the importer pays the IGST directly, not the supplier. The debate highlighted differing interpretations, with some suggesting that the matter might require judicial clarification to resolve the ambiguity in the law.