Query on input tax credit reversal - tnvat

This query is : Resolved 

Querist : Anonymous (Querist)
22 November 2011

I am a manufacturer in Chennai. We have received a Notice from the DCTO for reversal of input tax credit since 2006-07 for interstate sales made without Form C. Since we are a manufacturer, please let me know what is the formula for calculating the reversal of Input Tax Credit as we cannot identify which purchase bill is used for which product since we manufacture the goods. Is there any standard formula that TNVAT prescribes ? The DCTO claims that we have to pay 12.5% of the total Interstate bills made by us. But this looks unfair. Please help with your answer.

R K JAIN (Expert)
22 November 2011

There should not be reversal of input tax in the case of non receipt of C Form. However the sale will be considered without form and will be taxable as per the rate prescribed under the Act. The rate of tax will be on declared goods 8% and other goods taxable less then 10% will be taxable at the rate of 10% and the goods taxable in the state more then 10% will be taxable at the rate prescribed in the state it may be 12% or more. This formula is applicable till 31 March 2007. From 01 April 2007 the rate of tax will be the rate of tax applicable on local sale.

Rajeev Kumar (Expert)
22 November 2011

Already replied

Querist : Anonymous (Querist)
23 November 2011

Thanks. We have already collected and remitted the higher tax for all such sales without Form C. The current claim is under section 19 of TNVAT where it is mentioned that ITC (input tax credit) has to be reversed for all interstate sales without Form C. Please let me know what is the approved formula for the calculation of the Proportionate ITC to be reversed.

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