Pranav B Prem

In a ruling with significant implications for importers facing post-clearance customs demands, the Gujarat Authority for Advance Ruling (AAR) has held that Input Tax Credit (ITC) of IGST paid pursuant to a pre-notice consultation letter under Section 28(1) of the Customs Act, 1962 cannot be availed under the timelines prescribed in Section 16(4) of the CGST Act, 2017. The bench comprising Vishal Malani and Sushma held that a TR-6 challan used for payment of IGST after Out-of-Charge (OOC) has been given is not a prescribed document for availing ITC, and the only lawful method for such credit is through reassessment of the Bill of Entry, followed by electronic transmission to GSTN and reflection in GSTR-2B.

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The applicant, Hansaben Jayantibhai Patel (trade name: Tristual Die and Engineering Work), imported various items including Full Automatic Handles Cleaning Machine, Automatic Washing Machine with spare parts and Adjustable Toughened Glass. After issuance of the Bills of Entry dated 11.01.2023 and 13.01.2023, a pre-consultation letter was served on 05.04.2024 by the Additional Commissioner of Customs, Custom House, Kolkata under Section 28(1) of the Customs Act demanding differential IGST. The applicant discharged the amount of ₹27,14,559 with interest of ₹6,50,601 on 10.05.2024 through a TR-6 challan and received a closure letter noting that no further action was warranted.

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Seeking to claim ITC on the IGST paid, the applicant requested an advance ruling on eligibility to avail the credit within the time limit under Section 16(4) of the CGST Act. Relying on Rule 36(1)(d) of the CGST Rules, 2017, the applicant argued that the payment documents should be treated as valid evidence for ITC, contending that the challan substantiates duty payment, and that the pre-notice consultation letter ought to be treated as a document similar to a Bill of Entry for self-assessment. It was also submitted that the payment pertains to imports made during FY 2022-23 whereas the consultation letter and duty payment occurred in FY 2024-25, implying that the ITC timeline should be computed as if the invoice were received in that financial year.

Rejecting this contention, the AAR observed that a Bill of Entry is the only prescribed document for ITC on imports and that the legislature never intended a pre-consultation letter or TR-6 challan to be treated as such. The ruling emphasized that ICES has no functionality to accept additional payments through a Bill of Entry after OOC is given, except in provisional assessments, and any duty paid thereafter through a TR-6 challan cannot be treated as a valid basis to claim ITC. Referring to the CBIC Circular No.16/2023-Customs dated 07.06.2023, the AAR reiterated that “a TR-6 challan is not a prescribed document for the purpose of availing ITC by a registered person,” and that taxpayers must instead approach Customs to reassess the Bill of Entry so the tax reflects in GSTR-2B, enabling lawful availment of ITC.

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The AAR concluded that neither a TR-6 challan by itself, nor read with an SVB order or closure letters issued by Customs officials, can be treated as an eligible document for ITC under Section 16(2) of the CGST Act or Rule 36(1)(d) of the CGST Rules, 2017. Accordingly, the authority ruled that the applicant is not entitled to avail ITC of ₹27,14,559 IGST paid pursuant to the pre-consultation letter under Section 28(1) of the Customs Act, as the document does not meet the statutory requirements for input tax credit.

Applicant's Name: Hansaben Jayantibhai Patel