The AAR, Tamil Nadu in the case of M/s. Becton Dickinson India Private Limited [Ruling No. 20/ARA/2025 dated May 09, 2025] has held that TR‑06 challan is not a “prescribed document” for availing ITC of differential IGST paid on import.
Facts:
M/s. Becton Dickinson India Private Limited (“the Applicant”) is a company engaged in the manufacturing and trading of medical devices and equipment.
Under a Limited Risk Distributorship Agreement with its overseas group entities, Section 6.1 stipulates those goods must be supplied at a price ensuring the Applicant earns an arm’s‑length operating profit margin. If the actual margin earned by the Applicant exceeds the agreed arm’s‑length margin, the overseas supplier pays back the differential margin; if the margin falls short, the Applicant pays the difference. These true‑up adjustments give rise to differential import IGST.
The Special Valuation Branch examined these true‑up adjustments under Circular No. 05/2016‑Customs (dated 9 March 2016) and held that, in case of upward revision in the invoice value, the Applicant is liable to pay the applicable customs duties along with interest.
A similar true‑up adjustment arose in FY 2023–24. The Applicant imported goods through three different Chennai ports—Sea, Air Cargo, and FTWZ—and sought guidance on how to pay the differential duties.
The Chennai Sea Customs authority permitted re‑assessment of the original Bills of Entry, directing payment via revised BoEs, whereas the Chennai Air Cargo and FTWZ authorities required the Applicant to deposit the differential IGST through TR‑06 challans.
The Applicant has approached the Tamil Nadu Authority for Advance Ruling with four specific queries.
Issues:
- Whether the Applicant can avail ITC of import IGST paid through a TR‑06 challan in terms of Section 16(2) of the CGST Act, 2017 read with Rule 36 of the CGST Rules, 2017?
- Whether the eligibility to avail ITC of the import IGST paid by TR‑06 challan is subject to the time limit prescribed under Section 16(4) of the CGST Act, 2017?
- Whether the Applicant’s entitlement to ITC of the import IGST paid by means of a re‑assessed Bill of Entry is subject to the time limit prescribed under Section 16(4) of the CGST Act, 2017?
- Whether, if the answer to Issue 3 is in the affirmative, the time limit for availing such ITC begins from the original date of the Bill of Entry or from the date of its re‑assessment?
Held:
The AAR, Tamil Nadu in Ruling No. 20/ARA/2025 held as under:
- Observed that, Section 16(2) of the CGST Act expressly permits a registered person to avail Input Tax Credit on the basis of a “tax invoice or debit note or such other tax‑paying documents as may be prescribed.” Rule 36(1)(d) of the CGST Rules further clarifies that a “Bill of Entry for import of goods or any similar document” qualifies as one of the prescribed documents. However, it is equally clear that this provision limits eligible documents to those formally prescribed under the Customs Act, 1962 or rules made thereunder for the assessment of integrated tax on imports. In the instant case, the re‑assessed Bills of Entry satisfy this requirement, whereas TR-06 challans do not appear in the list of Customs‑prescribed forms and therefore cannot serve as valid documents for availing ITC.
- Held that, the Applicant ought to have pursued reassessment of duties on a Bill of Entry -wise basis, as such reassessment would have created legally valid documents for ITC claim, and not vide TR-06 Challans. The Bills of Entry, once re‑assessed, would have been seamlessly transmitted to the GSTN portal, in accordance with the mandatory pre‑import condition for Input Tax Credit. By contrast, TR‑06 challans—whether considered alone or in conjunction with SVB orders and Section 28(1)(b) notices under the Customs Act—do not fulfil the statutory requirement for transmission of duties data into the GSTN and are therefore ineligible for credit.
- Further noted that, the transition from the pre‑GST regime to the current GST framework has introduced a fundamental change in how customs duties are integrated with the GST system. Under the erstwhile CENVAT Credit Rules, 2004 (Rule 9), challans were recognized as documents eligible for credit. The GST regime, however, places an importance on the automated flow of duty details from Customs to the GSTN portal, making it imperative that only Customs‑prescribed documents-such as Bills of Entry, Courier Bills of Entry, and other Forms under the Customs Act-be accepted for ITC. This ‘noticeable difference’ underscores the importance of relying on the correct statutory instruments to maintain the integrity of the credit system.
- Opined that the, time restriction under Section 16(4) of the CGST Act applies equally to ITC claimed on re‑assessed Bills of Entry. Since Section 20 of the IGST Act renders the CGST provisions, including time limit imposed by Section 16(4), applicable mutatis mutandis to IGST, any credit based on imported goods must be claimed within the prescribed timeline.
- Finally, the Authority reasoned that because differential IGST and related interest become payable only upon an ‘upward revision’ in invoice value, the window for claiming ITC on such differential duties commences from the date of re-assessment of the Bill of Entry rather than the original import date.
Our Comments:
The Authority’s holding on excluding TR‑06 challans from the eligible documents for availing unutilised ITC highlights a critical complication for importers. The ruling clearly aligns with Para 6.1 of the Circular No. 16/2023-Customs, which affirms that only “assessed Bill of Entry” qualifies for ITC eligibility under Sections 16-18 of the CGST Act. The circular was issued to operationalize the Supreme Court’s decision in Union of India vs Cosmo Films Limited regarding the pre-import condition and emphasizes that IGST and cess payments must be recorded via reassessed BoEs, not TR‑06 challans, reinforcing the AAR’s exclusion of TR‑06 as a valid ITC document. But, sometimes, it’s difficult to get Bill of Entry re-assessed through ICEGATE portal, resulting in payment of IGST through TR-6 challan, as compliance by the taxpayers. Therefore, to avoid litigation and compliance risk, importers need clear procedural guidance from the CBIC on reconciling these divergent field instructions.
On the time‑limit issue, the AAR has correctly applied Section 16(4) mutatis mutandis to IGST, reinforcing that ITC is a conditional privilege rather than an unqualified right. However, the judgment stops short of addressing scenarios where reassessment proceedings are pending beyond the cut‑off date.
Relevant Provisions:
Section 16(4), the 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. 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.”
Section 20, IGST Act, 2017
Application of provisions of Central Goods and Services Tax Act:
“Subject to the provisions of this Act and the rules made thereunder, the provisions of Central Goods and Services Tax Act relating to,-
… 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.”
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