(1) Subject to the provisions of sub-section (5) and such restrictions and conditions as may be prescribed, a rebate of input tax as provided in this section shall be claimed by or be allowed to a registered dealer, in the circumstances specified below :

(a) (i) When a registered dealer purchases any goods specified in Parts I, II and IV of Schedule II, within the State of Chhattisgarh from another such dealer for sale within the State of Chhattisgarh or in the course of inter-State trade or commerce or in the course of export out of the territory of India, or for sale outside the State by way of stock transfer after payment to him of input tax, and

(ii) When a registered dealer purchases any goods specified in Parts I, II and IV of Schedule II other than those specified in Schedule III within the State of Chhattisgarh from another such dealer after payment to him of input tax, for use as capital goods in the course of business within the State of Chhattisgarh, and

(b) When a registered dealer purchases any goods including capital goods specified in Parts I, II and IV of Schedule II other than those specified in Schedule III within the State of Chhattisgarh from another such dealer after payment to him of input tax, for use or consumption of such goods for / in the manufacture or for / in mining in the State of any goods specified in Schedule II for sale within the State of Chhattisgarh or in the course of inter-State trade or commerce or for sale outside the State by way of stock transfer and of any goods specified in Schedule I and/or Schedule II for sale in the course of export out of the territory of India, or for sale to a registered dealer in Special Economic Zone as per the provisions of clause (iv) of sub-section (1) of Section 38,

he shall claim or be allowed, input tax rebate of such amount of tax, in such manner and within such period as may be prescribed.

(c) Where a dealer makes an application for grant of a registration certificate under clause (a) or clause (b) of sub-section (2) of Section 16 on or after the commencement of the Act, he shall in respect of,-

(i) Goods specified in Parts I, II and IV of Schedule II purchased on or after such commencement by him within the State of Chhattisgarh after payment to him of input tax for the purpose specified in clause (a); or

(ii) Goods specified in Parts I, II and IV of Schedule II other than those specified in Schedule III, purchased on or after such commencement by him within the State of Chhattisgarh after payment of input tax for the purpose specified in clause (b),

and held in stock by him on the date of validity of the registration certificate issued to him under clause (a) of sub-section (2) of Section 16, claim or be allowed input tax rebate of such amount of tax in such manner and within such period as may be prescribed.

(2)(a) Notwithstanding anything contained in sub-section (1), where a registered dealer purchases any goods specified in Parts I, II and IV of Schedule II in the circumstances stated in clauses (a) and (b) of the said sub-section and dispatches such goods or the goods manufactured by him, to a commission agent registered under the Act for sale, the input tax rebate in respect of such goods purchased for the purpose of sale within the State of Chhattisgarh shall be claimed by or be allowed to the registered dealer who receives the goods for sale on commission.

(b) No input tax rebate shall be claimed by or be allowed to the dealer (principal) who dispatches such goods for the said purpose. 

(3) The input tax rebate by a registered dealer under sub-section (1) or sub-section (2) and Section 73 shall be adjusted in such manner as may be prescribed towards the tax payable by him under this Act or under Central Sales Tax Act, 1956 (No. 74 of 1956) and the balance, if any, shall be carried over for adjustment towards tax payable in the subsequent year.

Provided that, if the amount of input tax rebate remains an adjusted and the dealer makes an application for refund of such amount, the assessment shall be made within one year from the date of application and such amount shall be granted by way of refund.

(4) The amount of input tax rebate, to which a registered dealer is entitled in respect of purchase of goods made by him for sale in the course of export out of the territory of India or for sale to a registered dealer in Special Economic Zone as per the provisions of clause (iv) of sub-section (1) of Section 38, which is not adjustable towards any tax payable by him in accordance with the provisions of sub-section (3), shall be granted to him by way of refund.

(5)(a)(i) Where a registered dealer having purchased any goods referred to in clause (a) of sub-section (1), from another such dealer for the purpose of sale has claimed input tax rebate in respect of such goods under clause (a) or sub-clause (i) of clause (c) of the said sub-section and adjusted such rebate towards the tax payable by him according to his return or returns, such dealer shall, in the event of disposal of such goods otherwise than by way of sale within the State of Chhattisgarh or in the course of inter-State trade or commerce or by way of sale outside the State, by way of stock transfer or in the course of export out of the territory of India, be liable to pay the amount of tax towards which input tax rebate in respect of the aforesaid goods was adjusted by him.

(ii) Where a registered dealer having purchased any goods referred to in clause (b) or sub-clause (ii) of clause (c) of sub-section (1) from another such dealer for the purpose of use or consumption of such goods for/in the manufacture or mining of any goods specified in Schedule II has claimed input tax rebate in respect of such goods under clause (b) or clause (c) of the said sub-section, and adjusted such rebate towards the tax payable by him according to his return or returns, such dealer shall, in the event of the disposal of goods manufactured or mined, in a manner otherwise than by way of sale in the State of Chhattisgarh or in the course of inter-State trade or commerce or by way of sale outside the State, by way of stock transfer] or in the course of export out of territory of India, be liable to pay the amount of tax towards which the aforesaid input tax rebate relating to such goods was adjusted by him.

(iii) Where the registration certificate of a registered dealer who having purchased any goods referred to in clause (a) or clause (b) of sub-section (1) and having claimed input tax rebate in respect of the said goods under the said clauses, is cancelled under sub-section (10) of Section 16, such dealer shall pay the amount claimed by way of input tax rebate under the said clauses in respect of the goods held in stock by him on the date the order of cancellation of the registration certificate takes effect.

(b) Where the amount of tax or the amount of input tax rebate which a registered dealer is liable to pay under clause (a) is not adjustable towards any input tax rebate to his credit, such dealer shall be liable to pay on the amount of tax so payable interest at the rate of one percent per month for the period commencing from the date of disposal of the goods in the manner stated in sub-clause (i) or sub-clause (ii) of clause (a) to the date of its payment.

(6) No input tax rebate under sub-section (1) shall be claimed or be allowed to a registered dealer,-

(i) in respect of any goods specified in Schedule II purchased by him from another such dealer for sale but given away by him by way of free sample or gift or given to or received by him by way of replacement;

(ii) in respect of goods specified in Schedule II for use or consumption for manufacture or mining of goods but the goods manufactured or mined are given away by him by way of free sample or gift or given to or received by him by way of replacement;

(iii) in respect of goods purchased by a dealer who opts for the composition of tax under the provisions of Section 10;

(iv) in respect of goods purchased from a dealer who opts for the composition of tax under the provisions of Section 10.

(v) in respect of any goods specified in Schedule II for which the amount of tax is not shown separately in the sale bill, invoice or cash memoranda.

(7)(a) The State Government, if it deems fit, may, by notification specify any goods mentioned in Part III of Schedule II for the purpose of claiming or allowing input tax rebate under this section, when such goods are purchased by a registered dealer from another such dealer within the State of Chhattisgarh,-

(i) after payment to him of tax under Section 8, or

(ii) which are tax paid goods at the hands of the selling registered dealer,

for use or consumption of such goods for / in the manufacture or for / in mining of any goods specified in Schedule II for sale within the State of Chhattisgarh or in the course of inter-State trade or commerce or in the course of export out of the territory of India and thereupon the input tax rebate in respect of such goods shall be claimed or be allowed in such manner, to such extent, within such period and subject to such restrictions and conditions as may be specified in the notification.

(b) The provisions of sub-clause (ii) of clause (c) of sub-section (1) and sub-sections (2) to (5) shall apply to input tax rebate that may be claimed or allowed in respect of goods referred in clause (a).