Transitional arrangements for input tax credit

(1) A registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit, if any, carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished by him under the existing law in such manner as may be prescribed: Provided that the registered person shall not be allowed to take credit in the following circumstances, namely:— (i) where the said amount of credit is not admissible as input tax credit under this Act; or (ii) where he has not furnished all the returns required under the existing law for the period of six months immediately preceding the appointed date; or (iii) where the said amount of credit relates to goods manufactured and cleared under such exemption notifications as are notified by the Government: Provided further that so much of the said credit as is attributable to any claim related to section 3, sub-section (3) of section 5, section 6, section 6A or sub-section (8) of section 8 of the Central Sales Tax Act, 1956 which is not substantiated in the manner, and within the period, prescribed in rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957 shall not be eligible to be credited to the electronic credit ledger: Provided also that an amount equivalent to the credit specified in the second proviso shall be refunded under the existing law when the said claims are substantiated in the manner prescribed in rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957. (2) A registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, credit of the unavailed input tax credit in respect of capital goods, not carried forward in a return, furnished under the existing law in such manner, for the period ending with the day immediately preceding the appointed day: Provided that the registered person shall not be allowed to take credit unless the said credit was admissible as input tax credit under the existing law and is also admissible as input tax credit under this Act. Explanation.—For the purposes of this section, the expression “unavailed input tax credit” means the amount that remains after subtracting the amount of input tax credit already availed in respect of capital goods by the taxable person under the existing law from the aggregate amount of input tax credit to which the said person was entitled in respect of the said capital goods under the existing law. (3) A registered person, who was not liable to be registered under the existing law, or who was engaged in the manufacture of exempted goods or goods which are wholly exempt from tax under the existing law, or who was engaged in the provision of taxable services or who was engaged in the sale of goods on which tax at the first point of sale is payable by the trader and the subsequent sales are not subject to tax in the State, and who is liable to be registered under this Act (or, as the case may be, the person who was entitled to input tax credit at the time of sale of goods), shall be entitled to take, in his electronic credit ledger, credit of the value-added tax and entry tax, if any, held in stock on the appointed day, in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day, subject to the following conditions, namely:— (i) such inputs or goods are used or intended to be used for making taxable supplies under this Act; (ii) the said registered person is eligible for input tax credit on such inputs under this Act; (iii) the said registered person is in possession of invoice or other prescribed documents evidencing payment of tax under the existing law in respect of such inputs; (iv) such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day: Provided that where a registered person, other than a manufacturer or a supplier of services, does not have any invoice or any other document evidencing payment of tax in respect of inputs, then such registered person shall, subject to such conditions, limitations and safeguards as may be prescribed, including that the said taxable person shall pass on the benefit of such credit by way of reduced prices to the recipient, be allowed to take such credit at such rate and in such manner as may be prescribed. (4) A registered person, who was engaged in the manufacture of taxable goods as well as exempted goods or tax-free goods under the existing law, but who is liable to pay tax under this Act, shall be entitled to take, in his electronic credit ledger, credit of the value-added tax and entry tax, if any, as the case may be: (a) the amount of credit carried forward in any return furnished by him under the existing law in pursuance of the provisions of sub-section (1); and (b) the amount of credit of value-added tax and entry tax, if any, in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day, in respect of such exempted goods or tax-free goods under the existing law in pursuance of the provisions of sub-section (3). (5) A registered person shall be entitled to take, in his electronic credit ledger, credit of value-added tax and entry tax, if any, in respect of inputs received on or after the appointed day, but the tax in respect of which has been paid by the supplier under the existing law, subject to the condition that the invoice or any other tax paying document was recorded in the books of account of such person within a period of thirty days from the appointed day: Provided that the period of thirty days may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding thirty days: Provided further that the said registered person shall furnish a statement, in such manner as may be prescribed, in respect of credit under this sub-section. (6) A registered person, who either paid tax at a fixed rate or paid a fixed amount in lieu of the tax payable under the existing law, shall be entitled to take, in his electronic credit ledger, credit of value-added tax and entry tax, if any, in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day, subject to the following conditions, namely:— (i) such inputs or goods are used or intended to be used for making taxable supplies under this Act; (ii) the said registered person is not paying tax under section 10; (iii) the said registered person is eligible for input tax credit on such inputs under this Act; (iv) the said registered person is in possession of invoices or other prescribed documents evidencing payment of tax under the existing law in respect of such inputs; and (v) such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day. (7) The amount of credit under sub-sections (3), (4) and (6) shall be calculated in such manner as may be prescribed.