16. Total reverse credit and revised reverse credit

(1) The total amount of reverse credit incurred by the dealer shall be the aggregate of the values of R1, R2, R3, R4, R5, R6, R7, R8, R9, R10, R11 and R12, if any, computed in accordance with the provisions of rule 14 and rule 15.

(2) (a) Notwithstanding anything contained in rule 14 and rule 15, every dealer to whom provisions of rule 15 apply shall, at or before the time of filing of annual return, make a revised computation of the total amount of reverse credit, if any, incurred by him during the year. The revised reverse credit shall be computed in the manner hereinafter provided:

(b) The dealer shall first compute the revised input-output ratio by applying the following Formula –

K = (OB + PR – CB) ÷ V

Where ,

K = The input-output ratio for the year to which the input tax credit relates;

OB = The value of opening stock of goods on the first day of the year to which the input tax credit relates;

PR = The value of goods purchased during the year to which the input tax credit relates;

CB = The value of closing stock of goods on the last day of the year to which the input tax credit relates; and

V = The aggregate of the sale of goods within the state, sales in the course of inter-state trade and commerce, stock transfers, exports and sales of goods specified in Schedule I of the Act during the year to which the input tax credit relates.

(c) The revised reverse credit shall then be recomputed by reapplying the value of K computed as aforesaid to the formulae mentioned in rule 15 and for this purpose the following values of I, P, H, J, L, M, N and Rt, wherever appearing, shall be taken as –

I = The input tax paid by the dealer on purchase of inputs, other than those specified in Schedule I, during the year to which the input tax credit relates;

P = The value of goods, other than goods specified in Schedule I of the Act, purchased during the year to which the input tax credit relates;

H = The total value of sales during the year to which the input tax credit relates by a manufacturer of goods specified in Schedule I and which have been manufactured by him from inputs other than those specified in Schedule I;

J = The total value of stock transfers during the year to which the input tax credit relates effected within the State by a manufacturer of goods specified in Schedule I and which have been manufactured by him from inputs other than those specified in Schedule I;

L = The total value of stock transfers during the year to which the input tax credit relates effected outside the State by a manufacturer of goods specified in Schedule I and which have been manufactured by him from inputs other than those specified in Schedule I;

M = The aggregate of the values of goods during the year to which the input tax credit relates the right wherein to use is transferred to another dealer or used for self consumption or as gift;

N = The aggregate of the values of inputs purchased during the year to which the input tax credit relates by the dealer from another registered dealer on which input tax credit has been claimed by the purchasing dealer and used in the manufacture of goods which have been lost, stolen or destroyed; and

Rt = The rate of tax applicable to the goods.

(d) If the revised reverse credit computed in terms of the provisions of clause (c) of this sub-rule is different from the aggregate of the reverse credit for the entire year computed under sub-rule (1) as aforesaid, the dealer shall –

(i) deposit the amount of difference, in case the revised reverse credit computed in terms of the provisions of clause (c) of this sub-rule exceeds the aggregate of the reverse credit for the entire year computed under sub-rule (1) and enclose the proof of payment with the annual return;

(ii) add the amount of difference to his entitlement of input tax credit during the month the annual return is filed, in case the revised reverse credit computed in terms of the provisions of clause (c) of this sub-rule is less than the aggregate of the reverse credit for the entire year computed under sub-rule (1).

(e) If the proportion, expressed as a percentage, of exports during the year to which the input tax credit relates to the aggregate value disposed during the said year is greater than the proportion, expressed as a percentage, of value addition effected to the aggregate value disposed, and the input tax credit, as adjusted by the revised reverse credit, if any, to which he is entitled for the year is more than the output tax for the said year then the dealer shall claim and be allowed a refund, in accordance with the provisions of rule 43, of such excess in the month following the month in which the annual return is filed.

Explanation 1: The expression aggregate value disposed shall mean the aggregate of the sale of goods within the state, sales in the course of inter-state trade and commerce, stock transfers, exports and sales of goods specified in Schedule I of the Act during the year to which the input tax credit relates.

Explanation 2: The expression value addition shall be the amount which remains after deducting the sum of the total purchases during the year and the closing stock at the end of the year to which the claim for input tax credit relates, from the sum of the aggregate value disposed and the value of opening stock at the beginning of the year to which the claim for input tax credit relates.