Vat refund to Cloth Manufacturer

There is a rule / provision in the VAT Act and Rules that a dealer shall not get the set-off or refund of the input vat if at all there is no output vat. So, prima-facie, there can be no set-off or refund for the input vat so paid on purchases.

However, if at all there is any sale other that the main product, say any fixed asset, then the input vat can be set-off against the asset sale and the difference can be claimed as refund.

Regards,

CA Amol G. Kabra