(1) The tax payable by a dealer for a tax period is -
(2) There shall be input tax credit of the amount of tax paid or payable under the Act by the registered dealer to the seller on his purchase of taxable goods specified in the Second Schedule, Third Schedule, Part-A of the Fourth Schedule and Part-B of the Fifth Schedule:
Provided that the registered dealer, who claims input tax credit, shall where required by the assessing authority establish that the tax due in such purchases has been paid by him:
Provided further that no input tax credit shall be allowed in respect of sugarcane specified in Part-B of the Fourth Schedule.
(3) Input tax credit shall be allowed for the purchase of goods made within the Union territory from a registered dealer and which are for the purpose of-
(i) re-sale by him within the Union territory; or
(ii) use as input in manufacturing or processing of goods in the Union territory; or
(iii) use as containers, labels and other materials for packing of goods in the Union territory; or
(iv) use as capital goods in the manufacture of taxable goods; or
(v) (a) sale in the course of inter-State trade or commerce falling under sub-section (1) of section 8 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956);
(b) sales covered by reduced rate under sub-section (5) of section 8 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956); and
(vi) Agency transaction by the principal within the Union territory.
(4) (a) Every registered dealer, in respect of purchase of capital goods wholly for use in the course of business of taxable goods, shall be allowed input tax credit.
(b) Deduction of such input tax credit shall be allowed on putting the capital goods to use and in the case of new industries on the commencement of commercial production. (c) Where a registered dealer makes purchase of parts and accessories for capital goods already purchased and used such parts and accessories in the manufacture of taxable goods, he is entitled to input tax credit relating to such goods in the month of purchase itself or end of that financial year but not thereafter.
(5) Input Tax Credit shall be allowed on tax paid or payable in the Union territory on the purchase of goods, in excess of the rate prevailing under the Central Sales Tax Act, 1956 (Central Act 74 of 1956) to such purchases;
(i) for transfer to a place outside the Union territory otherwise than by way of sale;
(ii) for use in manufacture of other goods and transfer to a place outside the Union territory otherwise than by way of sale:
Provided that if a dealer has already availed input tax credit there shall be a reversal of credit against such transfer in the current tax period.
(6) (a)The Principal is entitled for the input tax credit on those purchases which are transferred to the agent and sold by the agent on behalf of him.
(b) The Principal is entitled for the input tax credit for those purchases effected by the agent on behalf of him.
(c) The agent is not liable to pay tax on the sale of those goods, which were received by him from the Principal.
(7) (a) Input tax credit on inter-State sales shall be allowed only if Form -'C' prescribed in the Central Sales Tax (Registration and Turnover) Rules, 1957 is filed.
(b) Input tax credit on transfer of goods falling under section 6-A of the Central Sales Tax Act, 1956 (Central Act 74 of 1956) shall be allowed only if Form -'F' prescribed in the Central Sales Tax (Registration and Turnover) Rules, 1957 is filed.
(c) Input tax credit for sales falling under sub-sections (1) and (5) of section 5 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956) shall be allowed.
(d) Input tax credit for sales falling under sub-section (3) of section 5 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956) and any sale to Special Economic Zone shall be allowed only if the Form -'H' or Form -'I', as the case may be prescribed in the Central Sales Tax (Registration and Turnover) Rules, 1957 is filed.
(e) Input tax credit for sales of goods falling under sub-section (3) of section 6 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956) shall be allowed if Form -'J' prescribed in the Central Sales Tax (Registration and Turnover) Rules, 1957 is filed.
Note.-The Form-'C', Form-'F', Form-'H', Form-'I' and Form-'J' mentioned in clauses (a) to (e) of this sub-rule (7) of this rule 17 which are prescribed under the Central Sales Tax (Registration and Turnover) Rules, 1957 shall not be construed as the Form appended under these rules.
(8) (a) Where the business of the registered dealer is transferred on account of change in ownership or on account of sale, merger, amalgamation, lease or transfer of the business to a joint venture with the specific provisions for transfer of liabilities of such business, then, the registered dealer shall be entitled to transfer the input tax credit lying unutilised in his accounts to such transferred, sold, merged, leased or amalgamated concern. The transfer of input tax credit shall be allowed only if the stock of inputs, as such, or in process or the capital goods is also transferred to the new ownership on which credit has been availed of are duly accounted for, subject to the satisfaction of the assessing authority.
(b) If the transferee is claiming input tax credit, he shall furnish the following details, namely:-
(i) un-availed credit available in the account of the transferor as certified by a Chartered Accountant or Cost Accountant;
(ii) inventory of stock transferred with date;
(iii) details of capital goods transferred; and
(iv) original tax invoices evidencing the payment of tax at the time of purchase.
(c) The assessing authority shall verify the correctness of the details furnished under clause (b), and such assessing authority shall allow or determine the amount of input tax credit transferred to the dealer or reject the claim:
Provided that no order rejecting the claim shall be passed unless the dealer is given an opportunity of being heard.
(9) (a) Every registered dealer, other than those who opt to pay tax under section 15(2) and 19(1), who claims input tax credit for goods other than capital goods purchased on or after 1st July 2006 held in stock on the commencement of the Act shall submit a statement of transition stock in Form - V in duplicate along with a photostat copy of related purchase invoice or bill within thirty days from the date of commencement of the Act.
(b) In the case of claim of input tax credit for goods other than capital goods purchased on or after 1st July 2006, held in stock on the commencement of the Act,-
(i) where the purchase has been effected from first seller in the Union territory with invoice or bill showing the tax separately, the claim for input tax credit shall be allowed to the extent of the tax paid by him on the value of such goods;
(ii) where the purchases have been effected from second and subsequent dealer, the claim for input tax credit shall be restricted to the extent of the tax calculated on the purchase value of goods after deducting fifteen per cent and by using the tax fraction formula at the rates specified in the relevant Schedule under the Act.
The tax fraction formula is,
Where "t" is taxable sale inclusive of tax and
"r" is the rate of tax applicable to the sale.
The dealer who claims input tax credit under this sub-rule shall furnish separate statement;
(iii) if the goods taxable under the Pondicherry General Sales Tax Act, 1967 (Act No.6 of 1967) are exempted under the Act, no input tax credit shall be allowed;
(iv) where any tax is paid on any goods at the point of purchase by the dealer himself, such tax shall be eligible for claiming input tax credit except sugarcane;
(v) every registered dealer may claim the input tax credit immediately after the submission of a statement of transition stock held by him but not later than six months from the commencement of the Act; and
(vi) the assessing authority shall verify the claim made by the registered dealer with reference to the documents filed along with the statement of transition stock and he shall, after giving an opportunity of being heard to such registered dealer, pass an order within ninety days from the date of receipt of the claim determining the amount for which such registered dealer is entitled to input tax credit and reverse the claim wherever necessary.
(c) Notwithstanding anything contained in clause (a) and clause (b) of this sub-rule, the statement of transition stock in Form - V filed by any dealer which is duly certified by a Chartered Accountant or Cost Accountant shall be accepted by the assessing authority and the input tax credit claimed by such dealer shall be allowed immediately without verification.
(10) The registered dealer who claims input tax credit on capital goods shall file along with the monthly return the details of capital goods in respect of which input tax credit has been claimed. The details shall include purchase invoice number with date, suppliers name, TIN Number, value of capital goods on input tax credit claimed.
(11) (a) The registered dealer shall not be eligible to claim input tax credit until the dealer receives an original Tax Invoice duly filled, signed and issued by a registered dealer from whom the goods are purchased, containing such particulars of the sale evidencing the amount of input tax. Where a tax invoice is of all inclusive price, then the formula given under sub-section (9) of section 16 shall be adopted to arrive the taxable turnover and tax and the dealer shall specify in the tax invoice that the price charged is inclusive of tax and also specify the applicable rate of tax thereon.
(b) Where the original sale invoice is lost beyond recovery, the fact shall be presented before the assessing authority within thirty days from the date on which the original tax invoice is lost. It shall be accompanied by a duplicate or carbon copy of the original invoice. The assessing authority shall verify such claim and pass orders allowing input tax credit on the basis of duplicate or carbon copy of the original invoice or its rejection. When the claim is rejected, the assessing authority shall record his reasons for doing so and communicate to the dealer:
Provided that no order prejudicial to the dealer shall be passed unless the said dealer is given an opportunity of being heard.
(12) In case any registered dealer fails to claim input tax credit in respect of any transaction of taxable purchase in any month, he shall make the claim before the end of the financial year or before ninety days from the date of purchase, whichever is later.
(13) The registered dealer shall ordinarily keep all original purchase invoices and connected documents relating to the claim for input tax credit, for a period of five years from the date of commencement of the Act and shall produce such documents to the authority for scrutiny, if required.
(14) No ITC shall be claimed or be allowed to a registered dealer,-
(i) in respect of sale of goods exempted under sections 20 of the Act; and under sub-section (5) of section 8 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956).
(ii) on the tax paid or payable in other States or Union Territories on goods brought into this Union Territory from outside the Union Territory;
(iii) on the tax paid on purchase of goods sold in the inter- State trade and commerce falling under sub-section (2) of section 8 of Central Sales Tax Act, 1956 (Central Act 74 of 1956);
(iv) on the tax paid on purchase of capital goods which are used exclusively in the manufacture of exempted goods under sections 20 of the Act;
(v) for goods purchased and accounted for in business but utilized for the purpose of providing facility to the proprietor or partner or director including employees and in any residential accommodation;
(vi) on the purchase of all automobiles including commercial vehicles, two wheelers and three wheelers and spare parts for repair and maintenance thereof, unless the registered dealer is in the business of dealing in such automobiles or spare parts;
(vii) on the purchase of air-conditioning units unless the registered dealer is in the business of dealing in such air-conditioning units;
(viii) in respect of any goods purchased by him for sale but given away by him by way of free sample or gift or goods consumed for personal use;
(ix) in respect of goods not sold because of theft, loss or destruction for any reason, including natural calamity. If a dealer has already availed input tax credit against purchase of such goods, there shall be a reversal of tax credit;
(x) inputs destroyed in fire accident or lost while in storage even before use in the manufacture of final products;
(xi) inputs damaged in transit or destroyed at some intermediary stage of manufacture;
(xii) on any amount of tax paid in excess of the rate prescribed;
(xiii) on the purchase of capital goods prior to the commencement of the Act; and
(xiv) who is a casual trader.
(xv) the dealer doing business of goods falling under the Part-A of the Fifth Schedule and the Sixth Schedule to the Act shall not be entitled to input tax credit on goods purchased by him.
(15) Where a dealer has availed credit on inputs and when the finished goods become exempt, credit availed on inputs used therein, shall be reversed.
(16) Where a registered dealer without entering into a transaction of a sale, issues a tax invoice, invoice, bill or cash memorandum to another registered dealer with the intention to defraud the Government revenue, the assessing authority shall, after making such enquiry as it thinks fit and giving a reasonable opportunity of being heard, deny the benefits of input tax credit to such registered dealer who has claimed input tax credit based on such invoice, bill or cash memorandum from such date.
(17) (a) After availing input tax credit, if any, dealer who purchases goods, returns the goods and gets credited the price and tax paid, the tax credit so availed shall be reversed, only when,-
(i) the purchase was included in the return; and
(ii) the goods were returned within a period of six months from the date of purchase by him.
(b) Where a dealer who sells goods after paying tax, receives back his goods, he may deduct such tax amounts paid from the tax payable in the returns of following months only when, -
(i) in respect of sales return
(a) the sale was included in the return and the tax paid;
(b) the goods were received back or returned within a period of six months from the date of sale;
(c) the price of the goods and the tax, if any, charged thereon were refunded in full to the buyer; and
(d) the credit note shall contain the date and serial number of the invoice on which the tax was originally charged and brought to account;
(ii) in respect of unfructified sale
(a) the sale was included in the return and tax paid; and
(b) the goods were received back within a period of thirty days from the date of sale.
(c) wherever any credit notes are to be issued for discount or sales incentives by any dealer to another dealer after issuing tax invoice, the selling dealer shall pass a credit note without disturbing the tax component on the price in the original tax invoice, so as to retain the quantum of input tax credit already claimed by the buying dealers as well as not to disturb the tax already paid by the selling dealer.
(18) Where a registered dealer has purchased any taxable goods from another dealer and has availed input tax credit in respect of the said goods and if the registration certificate of the selling dealer is cancelled by the appropriate registering authority, such registered dealer, who has availed by way of input tax credit, shall pay the amount availed on the date from which the order of cancellation of the registration certificate takes effect.
(19) Partial credit of input tax :- In the following circumstances the input tax credit shall be claimed and allowed proportionately;
(i) Where goods purchased is used partly in business and partly for other than business (example: personal use),
(ii) Where goods purchased are used partly as raw materials in manufacture of taxable goods and partly in manufacture of exempted goods,
(iii) When a part of goods sold is taxable and the other part is exempted as per schedule;
(iv) When the capital goods is used both for manufacture of taxable goods and exempted goods;