Input Tax credit can be claimed only when a registered dealer purchases goods from another registered dealer and the selling dealer must have indicated the tax collected in the sale invoice. The original invoice is instrumental for claiming this credit.
Now, when the purchasing dealer buys from an unregistered dealer, there is no question of any input tax credit since the seller is not authorised to issue a tax invoice. Also, the buying dealer is not required to pay any tax on its purchase, if the goods suffer tax at the point of sale by the registered dealer.
Purchase tax is payable by the buying dealer when the goods purchased from unregistered dealer is used for manufacture of tax-exempt goods or for branch transfer, where no tax on sale is leviable.