Reversal of ITC, VAT + CST

[RajeshKumar C]

Dear All,

Dealer registered under Tamilnadu VAT Act has received notice from assessment circle proposing them to reverse ITC on goods stock transferred to other States, under Section 19(4) of TNVAT Act. While provisions exist for reversal @ 5%, stand taken by the department to reverse ITC on entire amount (not only locally purchased goods, which are stock transferred) appears to be incorrect. I request views/Circulars/Case laws which support this view that ITC reversal is to be done only for goods which are locally purchased by the dealer and not entirely. Also, any precedents on this will help! Thanks.