a. At the time of filing each return, as provided under section 11-1104 of this chapter, each person taxable hereunder shall pay to the commissioner of finance the taxes imposed by this chapter upon its gross income or gross operating income, as the case may be, for the taxable period covered by such return, less any credit to which such person may be entitled under subdivision b of this section. Such taxes shall be due and payable on the last day on which the return for such period is required to be filed, regardless of whether a return is filed or whether the return which is filed correctly indicates the amount of tax due.
b. (1) A taxpayer shall be allowed a credit against the taxes imposed by this chapter for the amount of sales and compensating use taxes imposed by section eleven hundred seven of the tax law which became legally due on or after, and which were paid on or after, July first, nineteen hundred seventy-seven but within the taxable period for which a credit is claimed, with respect to the purchase or use by the taxpayer of machinery or equipment for use or consumption directly and predominantly in the production of steam for sale, by manufacturing, processing, generating, assembling, refining, mining or extracting, or telephone central office equipment or station apparatus or comparable telegraph equipment for use directly and predominantly in receiving at destination or initiating and switching telephone or telegraph communication, but not including parts with a useful life of one year or less or tools or supplies used in connection with such machinery, equipment or apparatus.
(2) The amount of the credit provided in paragraph one of this subdivision shall be limited to the amount of such sales and compensating use taxes paid during the taxable period covered by the return under this chapter on which the credit is taken less the amount of any credit or refund of such sales and compensating use taxes during such taxable period. If such credit exceeds the amount of tax under this chapter payable for the taxable period in question, such excess amount shall be refunded or credited except in the case of a vendor of utility services who is entitled to a credit and/or refund for such sales and compensating use taxes under chapter five or six of this title. The credit allowed under this subdivision shall be deemed an erroneous payment of tax by the taxpayer to be credited or refunded in accordance with the provisions of section 11-1108 of this chapter, except as otherwise provided in the previous sentence.
(3) Where the taxpayer receives a refund or credit of any tax imposed under section eleven hundred seven of the tax law for which the taxpayer has claimed a credit under the provisions of this subdivision in a prior taxable period, the amount of such refund or credit shall be added to the tax imposed by section 11-1102 of this chapter of the taxable period in which such refund or credit of tax under section eleven hundred seven of the tax law is received.