17. Tax credit in respect of transactions between commission agent and principal and in case of transfer of business

(1) When a commission agent receives taxable goods from his principal for the sale on behalf of such principal, the principal shall issue tax invoice equivalent to the purchase price of the goods so transferred.

(2) The principal shall indicate the amount of tax separately in the tax invoice referred to in sub-rule (1).

(3) The tax to be indicated separately under sub-rule (2) shall be the amount which the selling dealer had charged on the goods purchased by the principal which is transferred to the commission agent.

(4) The liability of the principal to pay tax on such transfer of goods to the agent shall be as if it is a sale, and provisions of section 11 and the rules made thereunder shall apply, mutatis mutandis.

(5) The commission agent when selling the goods transferred to him by the principal, he shall be liable to pay tax under the Act on the sale price of such goods.

(6) The commission agent shall be entitled to claim tax credit under section 11 and the rules made thereunder to the extent the amount of tax charged separately in the tax invoice referred to in sub-rule (2).

(7) When the commission agent has sold the goods on behalf of the principal, the commission agent shall send to his principal a monthly statement showing the following particulars:-

(i) value (showing separately the amount of tax charged) of goods transferred by the principal,

(ii) sale price with amount of tax charged separately on the goods sold by the commission agent,

(iii) amount of the commission charged by the commission agent in respect of such goods sold by him on behalf of his principal.

(8) On receipt of statement referred to in sub-rule (7), the principal may include in his total turnover of sale, the difference of the amount referred to in clauses (ii) and (i) of sub-rule (7) and may deduct the similar amount from his turnover liable to tax under section 7 of the Act.

(9) When a commission agent purchases taxable goods on behalf of his principal, he shall issue to his principal a tax invoice indicating the value of the goods purchased and indicating separately the amount of tax charged in the original tax invoice of the goods so purchased and shall be liable to pay the tax under section 7 accordingly:

Provided that the commission agent may claim tax credit of the amount of tax charged separately on such purchase by the selling dealer in his tax period in which a tax invoice under this subrule is issued by him to his principal.

(10) The principal on receipt of the tax invoice referred to in sub-rule (9) shall show such purchases in his total turnover of purchases and section 11 of the Act and the rules made thereunder shall apply mutatis mutandis in respect of such purchases made by the commission agent.

(11) Where a dealer liable to pay tax under the Act transfers his business in whole or part as provided in section 51, the transferee of the business may claim the tax credit in the manner as under:-

(i) in case where business has been transferred in whole, then the amount of balance of tax credit on the day of such transfer shall be deemed to be transferred to the transferee subject to the provisions of section 11 and the rules made there under,

(ii) in case where business has been transferred in part, then the balance of the tax credit as admissible under the rules on the day of transfer shall be deemed to be transferred to the transferee subject to the provisions of section 11 and the rules made there under:

Provided that the transferor shall reduce such amount of tax credit transferred to the transferee under this clause in the tax period in which such transfer has taken place