VAT Input Credit incase of Interstate Stock transfer

Pls. clarify

One of our client is a Branch of Bangalore having H.O. at calculatta & other branches all over India, who are traders in Computers, Accessories etc.

Under KVAT they will buy goods @ 4% and part of the stock will be sold in Karnataka & part of the stock will be sent to H.O. or other branches as stock transfer.

1. Whether they are eligible for taking input credit on purchases fully and pay output taxes on local sales.

2. If so pls. give the relevant section & rule details.