(1) No deduction shall be made under section 40-

(a) if the dealer is not liable to pay tax under the Act;

(b) if the supplier, being a dealer registered under section 19 of the Act, produces before the deducting authority a certificate in Form C-III issued by the in charge of the circle in which he is registered.

(2) A supplier, for the purpose of obtaining the certificate in Form C-III, shall apply for the same in Form A-III and enclose therein the details of the supply contract for which he wants to obtain a certificate in Form C-III and the authority specified in rule 62 shall, after verifying the particulars furnished in the application, issue the certificate in relation to the supply contract in respect of which the certificate in Form C-III has been applied for:

Provided that no certificate in form C-III shall be issued to a registered dealer who has either failed to furnish the return required by sub-section (1) of section 24 within the time specified in the said sub-section or, having furnished a return under sub-section (1) of section 24, has failed to deposit the tax due in terms of such return or has failed to deposit any assessed tax or interest or penalty:

Provided further that the certificate in form C-III shall be valid only for the supply contract in respect of which the same has been granted.

(3) The provisions of sub rules (3), (4), (5) and (6) of rule 29 shall apply mutatis mutandis in so far as they relate to deductions, deposits, returns and certificates.