Uttar Pradesh VAT Rules

Reverse input tax credit

1. No input tax credit shall be allowed in respect of purchase of goods-
   • which are held in -
     1. closing stock at the time of discontinuance of business; or
     2. opening stock on the first day of period of composition scheme of payment of lump sum under section 27; or
     3. opening stock on the date on which dealers’ liability for payment of tax by virtue of proviso to sub-section (6) of section 3 has ceased; or
   • which are stolen, lost, destroyed, gifted, distributed as free samples or disposed of in any other manner otherwise than in the ordinary course of business; or
   • which are returned to the selling dealer within six months of the date of purchase of such goods.
2. Where a dealer has already claimed input tax credit in respect of any goods referred to in sub-section (1) or has wrongly claimed input tax credit in respect of any goods, benefit of input tax credit to the extent it is not admissible, shall stand reversed and the dealer shall be liable to pay such amount of reverse input tax credit within thirty days after the event comes to the notice of the dealer, along with simple interest at a rate of one and half percent per mensum for the period –
   • except cases of free distribution of goods as samples or disposal of goods otherwise than in the ordinary course of business, in all other cases mentioned in sub-section (1), from the date of occurrence of event and till the date of payment of such amount; and
   • where input tax has wrongly been claimed or goods have been distributed as free samples or disposed of otherwise than in the ordinary course of business, from the date following the last date prescribed for submitting return of the tax period in which goods, in respect of which input tax credit was claimed, were purchased and till the date of payment of such amount.

   Explanation: For the purpose of this section, input tax credit in respect of purchase of goods held in stock, stolen, lost, destroyed, gifted, distributed as free samples or disposed of otherwise than in the ordinary course of business includes input tax credit in respect of purchase of goods used, consumed or utilised in manufacture, processing or packing of any goods held in stock, stolen, lost, destroyed, gifted, distributed as free samples or disposed of otherwise than in the ordinary course of business, as the case may be.

Input tax credit exceeding tax liability

1. If amount of input tax credit admissible to a dealer for a tax period exceeds the amount of tax payable by the dealer for such tax period, the excess amount of input tax credit may be adjusted by the dealer against amount of tax payable in the return of the corresponding tax period under the Central Sales Tax Act, 1956.
2. Any excess amount of input tax credit left over after adjustment as provided in sub-section (1) shall be carried forward and be added to the amount of input tax credit for the next tax period.

   Provided that in case of a dealer whose main business is to sell goods in the course of the export of the goods out of the territory of India, subject to provision of section 41, assessing authority shall, on the application of the dealer, allow provisional refund of excess amount of input tax credit for any tax period after the dealer has submitted return for such tax period.

3. Where a dealer has submitted returns for all tax periods of an assessment year, and if any amount of excess input tax credit still exists according to return of the last tax period, such excess amount of input tax credit, subject to provisions of sections 40 and 42, shall be refunded to the dealer within thirty days after the last date prescribed or allowed for submission of return of last tax period of such assessment year.

   Provided that excess amount of input tax credit relating to first assessment year, on the commencement of this Act, shall be carried forward to the first return of the next assessment year and any excess amount of input tax credit according to return of the last tax period of later assessment year shall be refunded to the dealer within thirty days after the last date prescribed or allowed for submission of return of the last tax period of the such later assessment year.

4. Notwithstanding anything contained in sub-section (3) where a dealer discontinues business, refund of any excess amount of input tax credit relating to last tax period of the assessment year during which business has been discontinued shall be allowed within thirty days after the date of passing of assessment order for such assessment year.
5. Where return for any tax period of any assessment year has not been submitted by the last date prescribed or allowed for submission of return of the last tax period of the assessment year, excess amount of input tax credit, if any, for such assessment year, subject to provisions of sections 40 and 42, shall be refunded to the dealer within a period of thirty days after the assessment order in respect of such assessment year has been passed or after the last date prescribed or allowed for submission of return for the last tax period of the succeeding assessment year, whichever expires latter.
6. Notwithstanding anything contained contrary to in sub-section (2) and sub-section (3) any excess amount of input tax credit referred to in sub-section (3), at the option of the dealer, may be carried forward to the first tax period of the succeeding assessment year.

Burden of proof and presumptions

1. In any assessment proceedings where any fact is specially within the knowledge of the assessee, the burden of proving that fact shall lie upon him, and in particular, the burden of proving the existence of the circumstances bringing the case within any of the exemptions, exceptions or reliefs under any provisions of this Act including any claim of amount of input tax credit, shall lie upon him and assessing authority shall presume the absence of such circumstances.
2. Where a dealer obtains any tax invoice, sale invoice, bill or cash-memo from a dealer without making actual purchase of goods, it shall be presumed that the dealer obtaining such document has purchased goods, of equal quantity or measure and value, from person other than registered dealer with a view to evade payment of tax on purchase of such goods.
3. Where in respect of any goods or document found in possession of a dealer or in any place, building, vehicle or vessel in possession of a dealer, if the dealer claims that such goods or document does not belong to him or to the business carried by him, burden of proving the same shall lie on such dealer.
4. Where in respect of any goods any dealer claims that such goods have been purchased by him from within the State from a registered dealer but fails to produce tax invoice or a sale invoice, as the case may be, issued by such registered dealer, it shall be presumed that such goods have been purchased from a person other than a registered dealer.
5. Where in respect of any goods dispatched or consigned by a dealer either to self or his agent or to the purchaser or its' representative by road transport, if transport memo or a challan, as may be applicable, has not been issued, it shall be presumed that such goods have not been accounted for in documents maintained by the dealer in the ordinary course of business.
6. Where any goods found in custody of a person carrying on activities ancillary or incidental to or in connection with business have not been accounted for by such person in documents maintained by him in the ordinary course of business, if he claims that such goods belong to some other person, burden of proving the same shall lie on him, failing which it shall be presumed that such goods belong to him and for those goods he shall be treated a dealer.
7. Where in respect of any taxable goods, while such goods are being carried from outside the State, form of declaration for import prescribed under clause (a) of sub-section (2) of section 50 is required to accompany the goods, if any taxable goods are not accompanied with such form of declaration, unless, the dealer or the person in-charge of the goods, by furnishing sufficient proof establishes otherwise, it shall be presumed that such goods are being carried with an intention to evade payment of tax on sale of –
   • such goods if such goods are meant for resale; or
   • goods to be manufactured by using such goods if goods are meant for use in manufacture of any taxable goods.
8. Where a dealer liable to pay tax on -
   • sale of any goods, while making sale of such goods has shown sale price of such goods lesser than the actual sale value, unless the seller, by furnishing sufficient proof establishes otherwise, it shall be presumed that part of sale price has been suppressed with an intention to evade part payment of tax on turnover of sale of such goods; and
   • resale of any goods or on sale of taxable goods manufactured by using such purchased goods, while purchasing such goods, whether from outside the State or from inside the State, has shown purchase value of such goods lesser than the actual purchase value, unless the dealer, by furnishing sufficient proof establishes otherwise, it shall be presumed that part of the purchase value of such goods has been suppressed with an intention to evade part payment of tax on sale of -
     1. such goods by suppressing partial sale price of goods where goods are meant for resale; and
     2. goods to be manufactured, by suppressing partial sale value of manufactured goods where purchased goods are meant for use in manufacturer of any taxable goods.
9. Where a driver or the person in charge of any vehicle carrying any taxable goods, while obtaining authorisation for transit in respect of such goods under section 52 -
   • undertakes responsibility of transporting such goods outside the State, but fails to produce such goods along with authorisation for transit of goods before the officer in-charge of the exit check- post, unless, the owner or the person-in- charge of the vehicle, by sufficient proof establishes that the said goods have been taken outside the State, it shall be presumed that owner or the person in charge of the vehicle in collusion with the transporter who has issued goods receipts in respect of such goods, has sold the goods inside the State, or.
   • undertakes responsibility of handing over such goods to a disclosed bona fide person, transporter or any other carrier inside the State for carrying such goods outside the State, but fails to establish by sufficient proof that the goods were handed over to such bona fide person, transporter or carrier, as the case may be, it shall be presumed that owner or the person in charge of the vehicle in collusion with the transporter who has issued goods receipts in respect of such goods, has sold such goods inside the State; or
   • undertakes responsibility of handing over such goods to a disclosed bona fide person, transporter or any other carrier for carrying the goods outside the State and proves that such goods were handed over to such bona fide person, transporter or carrier, as the case may be, but such person, transporter or the carrier fails to produce such goods along with authorisation for transit of goods before the officer in-charge of the exit check- post, unless, such person, transporter or the carrier by sufficient proof establishes that the said goods have been taken outside the State, it shall be presumed that such bona fide person, transporter or carrier, as the case may be, in collusion with the transporter who has issued goods-receipts in respect of the goods, has sold such goods inside the State.

   Explanation: For the purpose of this section and section 52, where a vehicle has been supplied by the owner to any person under a contract of transfer of the right to use such vehicle for any purpose, transferee of the vehicle shall be deemed owner of such vehicle and burden to prove that the vehicle has been supplied to such person under such contract, shall lie on the actual owner of such vehicle at the relevant time.