The Appellate Authority for Advance Ruling (AAAR), Punjab, has upheld a significant decision clarifying that TR-6 challans cannot be used to claim Input Tax Credit (ITC) under the GST regime. The ruling emphasizes that only system-recognized documents, such as the Bill of Entry, qualify for availing ITC on imports.
Case Title:
M/s Aarti Steels Ltd. — Appellate Authority for Advance Ruling, Punjab
Date of Order: September 2025
Authority: Appellate Authority for Advance Ruling (AAAR), Punjab
Background of the Case
The appellant, M/s Aarti Steels Ltd., had made bulk IGST payments through TR-6 challans for earlier financial years to clear differential tax liabilities identified later. Subsequently, the assessee claimed ITC on these challans.
However, the department objected, stating that TR-6 challans are not recognized as valid documents for availing ITC under Section 16 of the CGST Act and Rule 36(1)(d) of the CGST Rules, which specifically mention the Bill of Entry as the basis for claiming ITC on imported goods.
AAR’s Ruling
The Authority for Advance Ruling (AAR) initially rejected the assessee’s claim, holding that TR-6 challans are not prescribed documents under GST law for availing ITC. According to the AAR, only the Bill of Entry—which captures the import transaction and tax payment—qualifies for ITC.
AAAR’s Observations
On appeal, the AAAR, Punjab, carefully reviewed the case and upheld the AAR’s decision. The key observations were:
- TR-6 challans are merely internal payment instruments and do not establish valid proof of IGST payment for ITC purposes.
- Under the GST framework, ITC on imports can be claimed only when the IGST amount appears on the Bill of Entry and is verifiable through the ICEGATE system.
- For any differential IGST payments made subsequently, assessees must undertake bill-of-entry-wise reassessment to ensure proper reflection in customs records.
- Permitting ITC on TR-6 challans would compromise the verification process and could open avenues for irregular credit claims.
Hence, the AAAR upheld the AAR’s finding that TR-6 challans are not valid documents for availing ITC, dismissing the appeal filed by the assessee.
Legal Provisions Involved
- Section 16(2)(a) of the CGST Act, 2017 – Specifies conditions for availing ITC.
- Rule 36(1)(d) of the CGST Rules, 2017 – Lists valid documents for claiming ITC (including Bill of Entry).
- Circular No. 135/05/2020-GST, dated 31.03.2020 – Clarifies ITC eligibility based on documentation.
Key Takeaways
- ITC on imports can be claimed only through Bill of Entry, not via TR-6 challans.
- Bulk payments made through TR-6 challans do not satisfy procedural requirements under GST.
- For any additional IGST liability, assessees must follow proper reassessment procedures and obtain a revised Bill of Entry.
- The ruling reinforces the importance of documentary compliance in ITC claims.
Conclusion
The AAAR Punjab’s decision in M/s Aarti Steels Ltd. serves as a reminder that technical compliance is non-negotiable under GST. Even genuine tax payments made through TR-6 challans cannot be used for claiming ITC unless reflected in a valid Bill of Entry. Taxpayers must ensure accurate customs documentation to safeguard their ITC claims.