- 21. Inadmissibility of input tax credit in certain cases.
(1) No input tax credit shall be admissible to a person for tax paid on purchase of goods, if such goods are lost or destroyed or damaged beyond repair.
(2) Input tax credit availed on the goods, which are lost, destroyed or damaged beyond repair, shall be reversed immediately on occurrence of such event.
(2A) Input tax credit shall be allowed to a taxable person to the extent of tax payable on the resale value of goods or sale value of manufactured/processed goods where such goods by the taxable person are sold at a price,-
(i) Lower than purchase price of such goods in the case of resale; or
(ii) Lower than cost price in the case of manufactured/processed goods, and in such cases the balance input tax credit (ITC) shall be reversed by the taxable person:
Provided that the provisions of this sub-rule shall not apply in cases where the sale has been made at a price lower than the companies, that is to say, Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited, Bharat Petroleum Corporation Limited and HPCL MITTAL Energy LImited.
(3) No input tax credit shall be admissible to a person in respect of such purchases for which he accepts from the selling person, an invoice which –
(a) has not been duly obtained from a taxable person against the bonafide transaction;
(b) does not contain all the required information as specified in rule 54; and
- (c) has been issued by a person, whose certificate of registration has been cancelled under the provisions of the Act.
(4) Where some goods as input or output are lying in the stock of a taxable person and where such goods become tax-free from a particular date, then from that date, no input tax credit shall be admissible to the taxable person on the sale of goods lying in the stock or on using the goods as input for making such tax-free goods.
(5) No input tax credit shall be admissible on goods purchased by a person during the period, he opted for Turn over Tax (TOT) under section 6 of the Act.
- (6) Where input tax credit has already been availed of by a taxable person against the purchase of goods, a part of which is, either used in manufacturing the goods, specified in Schedule ‘A’ or disposed of otherwise than by way of sale, the input tax credit so availed for such part of goods will be deducted from input tax credit for the relevant period of use or disposal referred to above. If, as a result of such deduction, there is a negative input tax credit balance for a particular period, the person concerned shall pay such tax forthwith, as if the same was payable in the said period.
- (7) Input tax credit in the case of iron and steel goods as enumerated in clause (iv) of section 14 of the central Sales Tax Act, 1956, except wheels, tyres, axles, wheel sets shall not be available unless the purchaser is a first stage taxable person or second stage taxable person.
- (8) Where some goods as input or output are lying in the stock of a taxable person and where rate of tax on such goods is reduced from a particular date, then from that date, input tax credit shall be admissible to the taxable person on the sale of goods lying in stock or on using the goods as input for manufacturing taxable goods, at the reduced rate.
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