Judicial Conflict: Applicability of Section 16(4) Timelines on Import ITC and the Divergent AAR Views

The framework of the Goods and Services Tax (GST) in India is predicated on the seamless flow of credit. However, this flow is often obstructed by procedural deadlines and interpretational ambiguities. One of the most contentious issues currently facing the legal fraternity and the business community is whether the strict timelines prescribed under Section 16(4) of the CGST Act, 2017 are applicable to the Input Tax Credit (ITC) availed on the import of goods.

While the statute explicitly mentions "invoices" and "debit notes," the document relevant to imports—the Bill of Entry—is often viewed through a different lens. Recent rulings by Advance Ruling Authorities have added layers of complexity to this debate. This article provides a comprehensive analysis of the recent Maharashtra Authority for Advance Ruling (AAR) decision in the case of M/s. Adi Enterprises and contrasts it with the interpretational logic applied by the Gujarat AAR in M/s. Priya Holdings Private Limited.

The Statutory Dilemma: Section 16(4) vs. Imports

To understand the gravity of the dispute, one must first dissect the relevant legal provisions. Section 16(4) of the CGST Act, 2017 acts as a limitation clause. It mandates that an assessee cannot claim ITC in respect of any invoice or debit note for the supply of goods or services after the thirtieth day of November following the end of the financial year to which such invoice or debit note pertains, or the furnishing of the relevant annual return, whichever is earlier.

The core controversy arises from the specific nomenclature used in the section. The provision restricts credit based on an "invoice or debit note." However, in the context of imports, the primary document for availing credit is the Bill of Entry, as prescribed under Rule 36(1)(d) of the CGST Rules. The absence of the phrase "Bill of Entry" or "other prescribed documents" in the limitation clause of Section 16(4) has led assessees to argue that the time bar should not apply to imports.

The Maharashtra AAR Ruling: M/s. Adi Enterprises

In a significant development, the Maharashtra AAR addressed this precise issue in the application filed by M/s. Adi Enterprises [NO. GST-ARA-03/2024-25/B-212, Mumbai dated 29.04.2025]. The Department had denied ITC to the assessee on imported goods, citing the expiration of the time limit under Section 16(4).

The Assessee’s Contentions

The applicant presented a robust defense based on a strict textual interpretation of the law. Their primary arguments were as follows: