(1) Within a period of three month from the appointed day, all dealers whose registration has been continued under sub-section (5) of section 25, other than those who are liable to pay turnover tax under section 16, shall furnish a statement of their opening stock of raw materials, finished goods, semi-finished goods including capital goods, if any, and goods for resale held on the date of such appointed day to the Commissioner inthe prescribed form.

(2) In respect of that part of the opening stock of goods on the appointed day, purchased within a period of twelve months immediately preceding the appointed day, which suffered tax under section 3-B of the repealed Act or on which tax has been paid under section 8 of that Act, input tax credit shall be admissible at such rate and in such manner as may be prescribed.

(3) The part of the opening stock of goods which is not covered under subsection (2), when sold inside the State after the appointed day shall be subject to output tax as applicable under this Act and in respect of such goods, subsequent input tax credit in accordance with the provisions contained therein shall be available.

(4) If the Commissioner is satisfied that a dealer has claimed input tax credit in excess of what is admissible or to which he is not entitled under sub-section (3), the Commissioner may, after allowing the dealer a reasonable opportunity of being heard, direct him to pay, by way of penalty, a sum equal to ten times the amount of input tax credit which is not so admissible or to which he is not so entitled.

(5) For the purpose of sub-section (4), the dealer shall, in support of his claim, produce before the Commissioner, if so deemed necessary, the sale vouchers in original under the repealed Act or the Central Sales Tax Act, 1956 (74 of 1956) against the purchases or the relevant document showing despatch of goods from outside the State otherwise than by way of sales to that dealer.