(1) Where input tax credit is already availed by a registered dealer against purchase of goods, a part of which is, however, used in manufacturing or processing of goods exempt from tax, the input tax credit so availed for such part of the goods will be deducted from the input tax credit for the tax period in which such event takes place.
(2) Where there is a negative input tax credit for a tax period, as a result of deductions made under sub-rule (1) the excess input tax credit availed of shall, by order in Form VAT-604, be demanded as if it was a tax due under the Act from the dealer and it shall be recovered as an arrear of tax under the provisions sub-section (7) of section 50.
(3) Where the goods purchased by a registered dealer from another registered dealer are returned to the selling dealer and necessary adjustment is made in their respective accounts, the purchasing dealer shall reverse the input tax credit availed by him for purchase of such goods, subsequently returned.
(4) Where a registered dealer fails to keep separate account of purchase of goods for the purpose of determining reverse tax credit under sub-rule (1), the input tax credit already availed shall be reversed in the following manner : -
(i) In case of a registered dealer manufacturing or processing both taxable goods and goods exempted from tax for sale;
Where 'X' is the input tax credit to be reversed,
'U' is the input tax credit availed during the tax period,
'V' is the total sale value of goods manufactured or processed, exempt from tax in that period,
'W' is the total sale value of goods manufactured or processed in that tax period.
(ii) In case of a registered dealer selling taxable goods, a part of which is damaged, or destroyed.
'V' is the total estimated sale value of goods, damaged or destroyed in that period,
'W' is the total sale value of goods including the sale value of 'damaged or destroyed' goods during that tax period