22. Input tax credit or input tax rebate by a registered dealer

(1)Every registered dealer other than those specified elsewhere in the Act, shall be entitled to claim an input tax credit or input tax rebate, as defined in clause (19) of section 2, and in such manner, and subject to such conditions and restrictions, as may be prescribed.

(2)The input tax credit or input tax rebate, as referred to in sub-section (1), shall be allowed to the registered dealer who has purchased taxable goods (hereinafter referred to as the "purchasing dealer") during a tax period for use by him in West Bengal subject to the provisions as laid down in sub-sections (3) to (20).

(3)Where a registered dealer, or a dealer who has made an application under sub-section (1) of section 24 within thirty days from the date of incurring liability to pay tax under the Act, without entering into a transaction of sale, issues to another dealer tax invoice with the intention to defraud the Government revenue, the Commissioner may, after making such inquiry as he thinks fit and after giving the dealers a reasonable opportunity of being heard, deny the benefit of input tax credit or input tax rebate to such dealers issuing or accepting such tax invoice, either prospectively or retrospectively, for the full tax period from such date as he may deem fit and proper.

(4)Subject to the other provisions of this section the input tax credit or input tax rebate shall be allowed to the extent of the amount of tax paid or payable by the purchasing dealer on his purchase of taxable goods, other than such taxable goods as specified in the negative list appended to this section, made in the State from a dealer when such goods are purchased for-

(a)sale or resale by him in West Bengal ; or

(b)sale in the course of inter-State trade and commerce within the meaning of section 3 of the Central Sales Tax Act, 1956; or

(c)use as containers or materials for packing of taxable goods intended for sale, in the State or in the course of inter-State trade and commerce within the meaning of section 3 of the Central Sales Tax Act, 1956; or 

(ca) use as containers or materials for packing of goods intended for sale in the course of export out of India within the meaning of section 5 of the Central Sales Tax Act, 1956; (74 of 1956) or

(d)use as raw materials and consumable stores required for the purpose of manufacture of taxable goods intended for sale in the State or in the course of inter-State trade and commerce within the meaning of section 3 of the Central Sales Tax Act, 1956; or

(e)use as containers or packing materials for use in the packing of goods so manufactured as referred to in clause (d) above; or

(f) use in the execution of works contract; or

(g)use as capital goods required, for the purpose of manufacture or resale of taxable goods or for execution of works contract, as the case may be, and purchases of such goods are capitalised in the books of account of such manufacturer, works contractor or reseller, as the case may be; or

(h)use as raw materials and capital goods required for the purpose of manufacture of any goods to be sold in the course of export under section 5 of the Central Sales Tax Act, 1956, and containers or packing materials for use in the packing of goods so manufactured; or

(i)making zero-rated sales other than those referred to in clause (h) above:

PROVIDED that if purchases are used partially for the purposes specified in this sub-section, the input tax credit or input tax rebate shall be allowed to the extent they are used for the purposes specified in this sub-section.

Provided also that where a registered dealer purchases any duty credit scrip from another registered dealer and utilises the same for import of goods to be used for the purpose of manufacturing of taxable goods within the State, input tax credit on the same shall be available to him under clause (d) or clause (h) or both.

4A) The input tax credit or input tax rebate in respect of a transaction involving taxable goods shall be available to the purchasing dealer-
(a) if the amount of tax is actually paid by the selling dealer in respect of such transaction by way of deposit into appropriate government treasury or by way of including such tax in the total amount of output tax shown in the relevant return submitted under section 32 by the selling dealer, and upon payment of the net tax payable as per the return; and
(b) the amount of input tax credit or input tax rebate shall not exceed the amount of tax so

(5)The input tax credit or input tax rebate shall not be claimed by the purchasing dealer until he receives-

(a)original tax invoice as referred to in sub-section (1) of section 64 issued in the prescribed manner evidencing the amount of tax, from the registered dealer, or a dealer who has made an application under sub-section (1) of section 24 within thirty days from the date of incurring liability to pay tax under the Act, from whom he has purchased the goods:

PROVIDED that if the original tax invoice issued to a registered dealer is lost from his custody, the purchasing dealer shall, on making an application to the Commissioner in such manner as may be prescribed, be entitled to claim input tax credit or input tax rebate on the strength of the order, if any, issued by the Commissioner under this sub-section; and

(6)If the input tax credit or input tax rebate available to a registered dealer for a year exceeds the output tax for that year, the excess input tax credit or input tax rebate shall be carried forward to the next year, in the manner as may be prescribed. 

(7)Where the taxable goods purchased are-

(a)despatched outside the State otherwise than by way of sale; or

(b)used as raw materials, consumable stores in manufacture of taxable goods, or in the packing of goods so manufactured, and the goods so manufactured are despatched outside the State other-wise than by way of sale,the registered dealer shall be entitled to input tax credit or input tax rebate of the amount of input tax paid or payable under clause (18) of section 2 calculated at the applicable rate which exceeds the amount calculated at the rate of three per centum or such other rate as may be prescribed:

PROVIDED that no input tax credit or input tax rebate shall be allowed to such dealer unless the amount of input tax calculated at the applicable rate exceeds the amount calculated at the rate of three per centum or such other rate as may be prescribed:

PROVIDED FURTHER that where a registered dealer has already enjoyed input tax credit or input tax rebate at a rate which is more than the rate he is eligible under this sub-section, his input tax credit or input tax rebate shall be reversed to the extent to which he is not eligible.

(8)Notwithstanding anything contained elsewhere in the Act, when a dealer enjoying deferment of payment of tax under clause (a), or tax holiday under clause (b), or remission of payment of tax under clause (c), of sub-section (1) of section 118, as the case may be, purchases within West Bengal, taxable goods which are used as raw materials in the manufacture of taxable goods or in the packing of goods so manufactured, or which are used as capital goods required for the purpose of manufacture of taxable goods, such dealer shall not be entitled to input tax credit or input tax rebate during the period of such enjoyment which shall be accumulated and carried forward until the expiry of such period of deferment, or tax holiday, or remission, as the case may be:

PROVIDED that such dealer shall be entitled to such accumulated input tax credit or input tax rebate after the expiry of such period of deferment, tax holiday or remission, as the case may be, in such manner and subject to such conditions and restrictions, as may be prescribed:

PROVIDED FURTHER that where in certain circumstances the output tax on sale of such goods in West Bengal by such dealer is not deferred, exempted, remitted, as the case may be, such dealer shall be entitled to input tax credit or input tax rebate in respect of purchases of such taxable goods within West Bengal :

PROVIDED ALSO that where the goods manufactured by using such goods have been exported out of the territory of India , such dealer shall be entitled to refund of input tax credit or input tax rebate in respect of such purchases of taxable goods within West Bengal . 

(8A) Notwithstanding anything contained elsewhere in this Act, a dealer as referred to in sub-section (8), in lieu of allowing his input tax credit or input tax rebate to be accumulated and carried forward until the expiry of his period of deferment, or tax holiday, or remission, as the case may be, may, at his option, and subject to such conditions and restrictions as may be prescribed, be entitled to refund of seventy-five per centum of the accumulated input tax credit or input tax rebate in respect of any quarter of a year in such manner as may be prescribed.

(9)Notwithstanding anything contrary contained elsewhere in this Act, a registered dealer as referred to in sub-section (1), shall be entitled to input tax credit or input tax rebate on taxable goods, other than capital goods, lying in stock of such dealer on the date on which he became liable to pay tax under this Act irrespective of the fact such dealer has not paid input tax under this Act, in such manner and subject to such conditions and restrictions, as may be prescribed, when such goods are purchased for-

(a) sale or resale by him in West Bengal ; or

(b)sale in the course of inter-State trade and commerce within the meaning of section 3 of the Central Sales Tax Act, 1956; or

(c)use as containers or materials for packing of taxable goods intended for sale, in West Bengal or in the course of inter-State trade and commerce within the meaning of section 3 of the Central Sales Tax Act, 1956; or

(d)use as raw materials required for the purpose of  manufacture of taxable goods intended for sale in West Bengal or in the course of inter-State trade and commerce within the meaning of section-3 of the Central Sales Tax Act, 1956; or

(e)use as containers or packing materials for use in the packing of goods so manufactured as referred to in clause (d) above; or

(f) use in the execution of works contract; or

(g)use as raw materials required for the purpose of manufacture of any goods to be sold in the course of export under section 5 of the Central Sales Tax Act, 1956, and containers or packing materials for use in the packing of goods so manufactured; or

(h)making zero-rated sales other than those referred to in clause (g) above:

PROVIDED FURTHER that the burden of proof that such goods are meant for the purposes mentioned in clauses (a) to (h), shall lie on such dealer.

(10)The methods used by a registered dealer in a year to determine the extent to which the goods are sold, used, consumed or supplied, or intended to be sold, used, consumed or supplied, shall be fair, reasonable and uniform throughout the year:

PROVIDED that the Commissioner may, after giving a registered dealer an opportunity of being heard and for reasons to be recorded in writing, reject the method adopted by such dealer and redetermine the amount of input tax credit or input tax rebate.

(11)Every registered dealer availing of the input tax credit or input tax rebate shall maintain such registers and books of account, and such accounts as referred to in section 63, in such manner, as may be prescribed. 

Provided that notwithstanding anything contained anywhere in the Act, input tax credit , or input tax rebate shall be allowed to a registered dealer whose turnover of sale or contractual transfer price in a year does not exceed rupees two crore where such registered dealer claims input tax credit or input tax rebate on the strength of documents referred to in sub-section (5) notwithstanding that such dealer has not maintained such registers and accounts , as are required to be maintained as per the provisions of sub-section (1) of section 63.

(12)Notwithstanding anything contained elsewhere in this section, no input tax credit or input tax rebate shall be allowed for purchases

(a)made from a registered dealer who has been allowed to pay tax at a compounded rate under sub-section (3) or sub- section (3A) or sub-section (3B) or sub section (6)  of section 16 or sub-section (4) of section 18; or

(b)made in the course of inter-State trade or commerce within the meaning of section 3 of the Central Sales Tax Act, 1956; or

(c)made in the course of import from outside the country within the meaning of sub-section (2) of section 5 of the Central Sales Tax Act, 1956; or

(d)made for use in business as defined in sub-clause (a) of clause (5) of section2, but are subsequently used for any other purposes; or 

(da) made from a registered dealer who obtained registration on the basis of false or incorrect documents or false or incorrect representations and whose certificate of registration has been cancelled on accordance with the provisions of clause (c ) of sub-section (1) of section 29; or

(db) made from a registered dealer who is found upon enquiry not to have existed, at the time of sale of goods, at the address as disclosed in tax invoice produced or, as the case may be, at the address as disclosed at the time registration, subject to the amendment made under section 27 or amendment application as moved under section 27A, if any; or

(e)of such goods and under such circumstances, as are specified in the negative list appended to this section.

(13)Where-

(a)a registered dealer­-

(i) purchases goods for the purposes specified in sub-section (4) and such goods are used fully or partly for purposes other than those specified in that sub-section; or

(ii)purchases goods and such goods are used fully or partly, for such purposes for which enjoyment of input tax credit or input tax rebate is not permissible; or

(iii) purchases goods and avails input tax credit or input tax rebate on such purchases on which he is not entitled to enjoy input tax credit or input tax rebate, or

(iv) purchases goods and avails input tax credit or input tax rebate on such purchases to the extent by which such input tax credit or input tax rebate is in excess of what he is entitled to enjoy in accordance with sub-section (4A); or

(b)a registered dealer has enjoyed input tax creditor input tax rebate, in respect of goods other than the capital goods lying in stock on the appointed day, or under sub-section (9), but such goods were, prior to such enjoyment or after, has been so damaged or destroyed that such goods are unsaleable,

the input tax credit or input tax rebate, if availed of, for such goods, shall be reversed to that  extent to which he is not eligible in the tax period during which such use has taken place, in such manner as may be prescribed.

(13A) Where the per unit sale price of any goods is less than per unit purchase price of such goods , input tax credit or input tax rebate in respect of such goods shall be restricted to the amount of output tax payable on sale of such goods .;

Provided that where a registered dealer has already enjoyed input tax credit or input tax rebate in excess of what is admissible according to this subsection, such excess credit shall be reversed to the extent to which he is not eligible.

(13B) where any goods purchased in the State are subsequently sold at subsidized price, the input tax credit or input tax rebate in respect of such goods shall be restricted to the amount of output tax payable on sale of such goods. 

(14)Where a registered dealer has purchased any taxable goods from a dealer who has made an application under sub-section (1) of section 24 within thirty days from the date of incurring liability to pay tax under the Act, and if the application for registration of the selling dealer is rejected subsequently, the purchasing registered dealer shall be entitled to input tax credit or input tax rebate against such purchases made till the date of order of rejection of such application.

(15)Where a transferee, lessee, or licensee is a dealer deemed to be registered under section 27B or where a transferee, lessee, or licensee is a dealer who has incurred liability to pay tax under section 27C and is registered under section 24, as the case may be, such transferee, lessee, or licensee shall after making adjustments- by way of reverse credit, if any, arising out of such transfer, be entitled to the input tax credit or input tax rebate, lying unutilised in the account of transferor, lessor, or licensor, as the case may be, subject to the satisfaction of the Commissioner that such input tax credit or input tax rebate has not earlier been availed of by such transferor, lessor, or licensor.

(16)Where any purchaser being a registered dealer to whom a credit note or a debit note has been issued under section 44, as a consequence of which the input tax credit or input tax rebate availed of by him in any period in respect of which the purchase of goods relates, becomes either short or excess, such registered dealer shall compensate such short or excess by adjusting the amount of input tax credit or input tax rebate allowed to him in respect of the tax period in which the credit note or debit note, as the case may be, has been issued subject to such conditions as may be prescribed.

(17)The net tax credit for tax period or a part thereof shall be determined in the following manner, namely:-

Net tax credit = A + B-C

Where-

"A" represents the amount of input tax credit or input tax rebate, for the tax period, which the dealer is entitled to under sub-section (1) subject to other provisions of this section and including input tax credit or input tax rebate availed in short of the eligible amount as referred to in sub-section (16) during the preceding tax periods not exceeding twelve English calendar months;

"B" represents outstanding input tax credit or input tax rebate brought forward as determined from the previous tax period;

"C" represents reverse tax credit as determined under the second proviso to sub-section (7) or sub-section (13) or sub-section (15) and includes the amount of input tax credit or input tax rebate availed in excess of the eligible amount as referred to in sub-section (16). 

(18)The State Government may, by notification specify any class of dealers that shall not be entitled to input tax credit or input tax rebate whether in full or in part.

(19)Where a registered dealer transfers any goods to an auctioneer or a broker or any other agent, such auctioneer or broker or any other agent shall not be entitled to get any input tax credit or input tax rebate.

(20)The burden of proof on the admissibility of the amount of input tax credit or input tax rebate, shall lie on the registered purchasing dealer.