The
set-off available under any rule shall be reduced and shall accordingly
be disallowed in part or full in the event of any of the contingencies
specified below and to the extent specified.
(1) If the claimant
dealer has used any taxable goods as fuel,
then an amount equal to three per cent (before
01/04/2007 it was four per cent) of the corresponding purchase price shall be
reduced from the amount of set-off otherwise available in respect of the said
purchase.
(2) (a) If the claimant
dealer manufactures any tax free goods then an amount equal to “the amount calculated at the rate notified from
time to time, by the Central Government for the purposes of sub-section (1) of section 8
of the Central Sales Tax Act, 1956” of the purchase price of the
corresponding taxable goods purchased by him (not being goods treated as
capital assets or used as fuel) shall be reduced from the amount of set-off
otherwise available in respect of the said purchases.
“Explanation .- For the purpose
of this clause ” manufactured tax free goods” will not include “goods to which Schedule A applies if” and the said goods
are sold in the course of export out of the territory of India and the export
is covered by section 5 of the Central Sales Tax Act, 1956,”
(b) If the claimant dealer resells any tax free goods and the
tax-free goods are packed in any material, then an amount equal to “the amount calculated at the rate notified from
time to time, by the Central Government for the purposes of sub-section (1) of section 8
of the Central Sales Tax Act, 1956” of the purchase price of the
corresponding purchases of packing
materials , if any, shall be reduced from the amount of set-off otherwise
available in respect of the said purchases of packing materials.
” Provided that no reduction under this clause shall be
made if the goods packed are sold in the course
of export out of territory of India and the export is covered by section 5
of the Central Sales Tax Act, 1956.”;
(3) (a) If the claimant
dealer dispatches any taxable goods
outside the State, to any place within India, not by reason of sale, to his
own place of business or of his agent or where the claimant dealer is a
commission agent, to the place of business of his principal, then an amount
equal to four percent of the
purchase price of the corresponding taxable goods (not being goods treated as
capital assets or used as fuel) shall be deducted from the amount of set-off
otherwise available in respect of the said purchases.
“Explanation.-
(a) If the taxable goods dispatched outside the State , then an amount
equal to one percent of the purchase price of the corresponding taxable goods,
in so far as the corresponding taxable goods are covered by any entry in
schedule B, shall be deducted from the amount of set-off otherwise available in
respect of the said purchases;
(b) “Provided further that, the
provisions of this clause shall not be applicable in respect of the
contingencies specified in clause (b);”
(b) If the claimant dealer manufactures
the goods covered under entries 5,6,7,8,9 and 10 of Schedule “D”
appended to the Act and dispatches the said goods not reason of sale, outside
the State to any place within India to his own of business or the place of
business of his agent or where the claimant dealer is a commission agent to the
place of business of his principal, then an amount equal to four per cent of the value of the goods so
dispatched shall be reduced from the amount of the set-off otherwise available
in respect of the aforesaid manufactured goods.”
(4) If the claimant
dealer has made a sale by way of transfer of property in goods (whether as
goods or in some other form ) involved in the execution of works contract then, if the claimant dealer has opted for
composition of tax under sub-section (3) of section 42 , “the
corresponding amount of set-off other than the set-off pertaining to purchases
of capital assets and set-off pertaining to goods in which property is not
transferred shall be reduced and the set-off shall be allowed and calculated,
—
(a) by multiplying the said amount of
set-off by the fraction 16/25 where the dealer has opted to pay tax @ 8% on the
total contract value, and
(b) in respect of periods starting on or after 20st June 2006 by reducing from
the amount of set-off a sum equal to 4% of the purchase price on which such
set-off is calculated where the dealer has opted to pay tax @ 5% on the total
contract value in the case of construction contracts.”;
“Explanation .- For the purposes of this sub-rule, the expression
“claimant dealer” shall also include a sub-contractor if the principal
contractor has awarded the contract or part of contract to a sub-contractor and
the principal contractor has opted in respect of the said contract for the
composition of tax under sub-section (3) of section 42.”
(5) If the business in
which the dealer is engaged is discontinued
and is not transferred or otherwise disposed of and is not continued by any
other person, then the set-off on purchases not being purchases treated as
capital assets, corresponding to the goods held in stock at the time of
discontinuance shall be disallowed and accordingly be reduced fully.
(6) If out of
the gross receipts of a dealer in any year, receipts on account of sale are
less than fifty per cent of the total receipts, –
(a) then to
the extent that dealer is a hotel or club, not being covered under composition
scheme, the dealer shall be entitled to claim set-off only,-
(i) On the
purchases corresponding to the food and drinks (whether alcoholic or not) which
are served, supplied or, as the case may be, resold or sold, and
(ii) On the
purchases of capital assets and consumables pertaining to the kitchens and
sale, service or supply of the said food or drinks, and
(b) in so far
as the dealer is not a hotel or restaurant, the dealer shall be entitled to
claim set-off only on those purchases effected in that year where the
corresponding goods are sold or resold within six months of the date of
purchase or are consigned within the said period, not by way of sale to another
State, to oneself or one’s agent or purchases of packing materials used for
packing of such goods sold, resold or consigned:
Provided that for the purposes of clause (b), the dealer who is a manufacturer
of goods not being a dealer principally engaged in doing job work or labour
work shall be entitled to claim set-off on his purchases of plant and machinery
which are treated as capital assets and purchases of parts, components and
accessories of the said capital assets, and on purchases of consumables, stores
and packing materials in respect of a period of three years starting from the
date of effect of the certificate of registration.”;
(7) Deleted
w.e.f 01.05.2011(***)
“(7A) If the claimant dealer has purchased office equipment, furniture or
fixtures and has treated them as capital assets and he is not engaged in the
business of transferring the right to use these goods (whether or not for a
specified period) for any purpose, then the corresponding amount of set-off to
which he is otherwise entitled shall be reduced by an amount equal to three
per cent (four per cent before 01/04/2007) of the purchase price on which such
set-off is calculated and the balance shall be allowed.”
“(7B) If the claimant dealer is holding a license for transmission or as
the case may be, distribution of electricity under the Electricity Act,
2003 or is a generating company as defined in the said Act, then in respect of
the periods starting on or after the 1st April 2005, save as otherwise provided
under sub-rule (1), an amount equal to the amount calculated at the rate
notified from time to time, by the Central Government for the purposes of
sub-section (1) of section 8 of the Central Sales Tax Act, 1956 of the purchase
price of the goods purchased including goods treated as capital assets by him
for use in the generation, transmission, or, as the case may be, distribution
of electricity shall be reduced from the amount of set-off otherwise available
in respect of the said purchases of goods including goods treated as capital
assets.”;
8) The claimant dealer shall deduct the
amount required to be reduced under this rule from the amount of set-off
available in respect of the period in which the contingencies specified in this
rule occur and claim only the balance amount as set-off and when the amount so
required to be deducted exceeds the said amount of set-off available in respect
of that period, he shall pay an amount equal to the excess at the time when he
is required to pay the tax in respect of the said period.
[“(9)(a) For the purposes of sub-rule (1), clause (a) of sub-rule
(2) and sub-rule (3), any reference to the corresponding goods on the purchase
of which set-off is claimed, shall be construed in relation to any period
starting on or after the 1st April 2005, as a reference to the corresponding
goods (not being consumable, stores, or goods treated as capital assets, parts,
components and accessories of capital assets and goods used as fuel) which are
resold or are so dispatched outside the State or are used in or relation to the
manufacture of goods so sold or dispatched and are contained in the goods so
sold, resold or dispatched and the packing material used along with the goods
so sold, resold or dispatched. Any reference to the corresponding purchase
price, corresponding taxable goods or corresponding purchases of packing
material shall be construed accordingly.
(b) While reducing set-off under,-
(i) sub-rule (2), for the purpose of determining the purchase price of
the corresponding taxable goods, where it is not possible to ascertain the
purchase price by reference to the books of account, the ratio of the sale
price of the taxable goods and tax free goods or where there is no sale price,
the value of the taxable goods and tax free goods shall be applied; and
(ii) Sub-rule (3), the ratio of the value of the goods inclusive of any
duty of Excise as it appears in the books of accounts of the goods dispatched
as aforesaid and the sale price of other goods shall be applied for deciding
the corresponding purchase price.
(10) If the dealer has executed a contract, at any time after the 1st
April 2005, of processing of textiles, then set-off on the goods purchased on
or after the said date, shall be allowed to the extent of tax paid on purchases
in excess of the amount calculated at the rate notified from time to time, by
the Central Government for the purposes of sub-section (1) of section 8 of the
Central Sales Tax Act, 1956 on the purchase price,-
(a) As regards the goods in respect of which property is transferred
during the said processing, and
(b) As regards packing materials used for packing of the said textiles,
and
(c) As regards other purchases including purchases of capital assets
shall be calculated as permissible under other rules.”.]
