(1) Where there is requirement for adjustment of the sale price or tax in relation to a taxable sale, the dealer making such adjustment may issue a credit note or debit note, as the case may be.

(2) Credit note or debit note as referred to in sub-rule(1) shall be issued within six months following the tax period, during which the original sale had taken place.

(3) An adjustment of the sale price and tax in relation to a taxable sale can be made, where-

(a) the sale is cancelled; or

(b) the nature of the sale is fundamentally altered; or

(c) the previously agreed consideration for the sale is altered by agreement with the buyer, whether due to reasons of quality or any other reason, consistent with the normal trade practice; or

(d) the goods or part thereof are returned to the seller and, the seller accepts the return of the goods subject to the condition that such return of goods is made within thirty days from the date of sale:

Provided that-

(i) a tax invoice in relation to the sale and the amount shown thereinas tax charged on the sale are incorrect as a result of occurrence of any one or more of the events specified above; and

(ii) a return has been filed for the tax period in which the sale took place and an incorrect amount of tax on that sale has been accounted for as a result of the occurrence of any one or more of the events specified above.

(4) Where sub-rule (3) applies, the dealer effecting the sale shall make an adjustment as specified in sub-rule (5) or sub-rule (6) and such adjustment shall be subject to the particulars as contained in the credit note or debit note, as the case may be.

(5) Where the output tax correctly calculated as due in respect of any sale exceeds the output tax actually shown in the tax invoice and accounted for by the dealer making the sale, the amount of excess shall be treated as tax charged by such dealer in relation to the sale made in the tax period in which the credit note was issued as a result of occurrence of any or more events referred to in sub-rule (3).

(6) Subject to the provisions of sub-rule (9), where the output tax actually shown in the tax invoice and accounted for exceeds the output tax correctly calculated as due in relation to any sale, the dealer making the sale, shall be eligible for input tax credit for such excess amount in the tax period in which the debit note was issued as a result of occurrence of any or more events referred to in sub-rule (3).

(7) The input tax credit under sub-rule (6) shall be allowed by way of reduction of output tax in the tax period referred to in that sub-rule.

(8) Where the input tax credit under sub-rule (6) can not be adjusted in accordance with sub-rule (7), it shall be carried over to the next or subsequent tax period or tax periods, as the case may be.

(9) No input tax credit shall be allowed under sub-rule (6), unless the amount of the excess tax has been refunded by the registered dealer to the buyer and sufficient evidence to the satisfaction of the assessing authority against such repayment has been adduced.