[Reported as PTCL 1998 St.1485]

Subject:-- INPUT TAX PAID ON GOODS PURCHASED BY A PERSON BEFORE REGISTRATION.

A question has arisen whether or not input tax paid on goods acquired by a person before registration under section 14 or section 18 of the Sales Tax Act, 1990, as the case may be, shall be adjustable against his output tax liability (i.e. against his taxable supplies after registration).

2. It is hereby clarified that up to 30.6.1997, input tax credit in such a situation, was available under section 59 of the Sales Tax Act, 1990, provided the goods were purchased from a registered person against an invoice issued under section 23 of the Act during a period of thirty days before making an application for registration under section 15. This period in case of a manufacturer importing goods in his own name was 90 days. However, section 59 was omitted vide the Finance Act, 1997. Therefore, w.e.f. 1st July, 1997, input tax credit of stocks acquired before registration is not available to a person obtaining registration subsequently. This has already been clarified in paragraph 2(ii) of the Budget-Day Instructions issued under Board's C.No.4/ STB/97 dated 13.06.1997.