123. Input tax credit in respect of stock held on the appointed day. –

(1) On the 1st day of April, 2005, if a registered dealer has in stock, goods on which sales tax has been paid, he shall be entitled to the claim of a credit of sales tax paid or sales tax suffered in respect of those goods in hand on that date, which were purchased on or after 1st day of April, 2004.

(2) The claim of input tax credit on sales tax under sub-rule (1) shall be subject to the following conditions, namely: –

(a) the dealer claiming credit shall be a registered dealer.

(b) The credit of input tax claimed shall be the tax paid on purchases made from a registered dealer under the repealed Act inside the State,

(c) a dealer claiming credit shall provide an inventory of all goods in hand on the 1st day of April, 2005 on which tax credit is claimed.

(d) documentary evidence of payment of sales tax at the time of purchase of or evidence that the goods had suffered tax at the first point of sale in a series of sale under the repealed Act shall be made available for examination and shall be retained by such dealer.

(e) where documentary evidence as provided in clause (d), is available, the credit that can be claimed shall be the tax actually charged, paid or suffered under the repealed Act.

(f) a claim for credit of sales tax shall be made by the end of April 2005.

(g) the registered dealer shall keep all documents basing on which the claim for credit has been made and shall make available such documents for audit and admission of the claim of credit.

(h) the assessing authority shall verify and allow the claim of credit, as found admissible, within six months, from the date following the period of three months from the appointed day.

(i) the claim shall be made in Form VAT-607.

(3) When the claim of credit preferred by a registered dealer is accepted, he shall be communicated in Form VAT -608 the amount of claim admitted and the date from which it shall be availed.

(4) The input tax credit admitted shall be apportioned over a period six months in equal instalments and shall be adjusted against output tax payable.

(5) No credit under this rule shall be allowed to a registered dealer liable to pay turnover tax under clause (b) of section 9.

(6) Notwithstanding anything contained in sub-rules (1), (2), (3), (4) and (5), a registered dealer entitled to input tax credit on the stock held on the appointed day, can sell goods out of such stock in regular course of business and charge VAT on such sale.