DOCUMENTS, ACCOUNTS & RECORDS IN GST (PART-II)

[Dr. Sanjiv Agarwal]

Books and records be maintained in case of taxable person having multiple places of business

As per first proviso to sec 35(1) of the GST Act, 2017, where more than one place of business is specified in the certificate of registration, the accounts relating to each place of business shall be kept only at respective places of business.

Accordingly, in case where more than one place of business is specified in the certificate of registration, records relating to each place of business should be maintained at that place and not at any other place including principal place of business.

According to second proviso to sec 35(1) of the GST Act, 2017, the registered person may keep and maintain such accounts and other particulars in the electronic form in the prescribed manner. In case where records are maintained in electronic form, then they have to conform to the prescribed manner for such electronic accounts.

Since the law does not require mandatory account keeping in an electronic form and in view of the use of word, ‘may’ in sec 35(1), it can be said that accounts and records can be maintained in physical form.

It may be noted that  Maintenance of records was also prescribed under the Central Excise, Service Tax and state VAT laws. The provisions are briefly discussed below:

Service tax records

• Rule 5(1) of Service tax Rules, 1994 provided that the records including computerized data as maintained by the assessee in accordance with the various laws in force from time to time shall be acceptable.
• Rule 5(2) provided that every assessee, at the time of filing of his first return shall furnish to the department, a list in duplicate of,

(a)     All the records maintained by the assessee for accounting of transactions in regard to:

(i)     Providing of any service,

(ii)     Receipt or procurement of input service and payment of such input service,

(iii)    Receipt, purchase, manufacture, storage, sale, or delivery, as the case may be in regard to input or capital goods, and

(iv)    Other activities such as manufacture and sale of goods, if any.

(b)     All other financial records maintained by him in the normal course of business.

• Rules 5(4) and (5) provided for preservation of records in electronic form.

Central Excise Records

• Rule 10 of the Central Excise Rules, 2002 required the maintenance of maintenance of ‘Daily Stock Account’ indicating the particulars regarding description of the goods produced or manufactured, opening balance, quantity produced or manufactured, inventory of goods, quantity removed, assessable value, the amount of duty payable and particulars regarding amount of duty actually paid.
• Chapter 6 of the Central Excise Manual required every assessee to furnish to the range officer, a list in duplicate, of all the records prepared or maintained by him for accounting of transactions in regard to receipt, purchase, manufacture, storage, sales or delivery of the goods including inputs and capital goods.
• Rule 9 of CENVAT Credit Rules, 2004 provided for maintenance of various records for availment and utilization of CENVAT credit on inputs, input services and capital goods.

VAT Records

• VAT laws of most states obligated every assessee to keep and maintain an up-to-date, true and correct account showing full and complete particulars of his business and such other records as may be prescribed. There was an option to maintain those records at other place or places as he may notify to the registering authority in advance.

Requirements for generation and maintaining accounts in electronic form

The following requirements as per rule 57 GST of the GST Rules, 2017 have been prescribed for generation and maintenance of records in electronic form.

• maintenance of proper electronic back-up of records
• preservation of records in a manner that information can be restored in case of distortion
• production of the relevant records or documents, duly authenticated, in hard copy or in any electronically readable format, on demand
• making available files, codes, passwords etc on demand

Section 35(1) of the GST Act, 2017 prescribes that every registered taxable person shall keep and maintain accounts and other records. Since, electronic cash ledger and electronic credit ledger on common portal are maintained by government under GSTN system for GST administration therefore, electronic cash ledger and electronic credit ledger on common portal may not be covered under accounts and records. However, these can be useful aid for reconciliation and audit trail.

Commissioner power to notify and require taxable persons to maintain additional accounts or documents

As per sec 35(3) of the GST Act, 2017, the Commissioner may notify a class of taxable persons to maintain additional accounts or documents for such purpose as may be specified.

Accordingly, the Commissioner may notify:

•  a class of taxable persons,
•  to maintain additional accounts or documents,
•  for such purpose as may be specified.

This power is vested with the Commissioner for prescribing additional accounts or documents for certain classes of taxable persons. This discretion is only in relation to class or classes of taxable persons and not for any individual taxable persons. For example, additional records may be specified for mining, cement industry, IT sector etc.

Manner of maintaining the accounts

As per sec 35(4) of the GST Act, 2017, where the commissioner considers that any class of taxable persons is not in a position to keep and maintain accounts in accordance with the provisions of this section, he may, for reasons to be recorded in writing, permit such class of taxable persons to maintain accounts in such manner as may be prescribed.

Following points are important for permitting any change in manner of maintaining accounts-

• change in manner shall be permitted by the commissioner
• such permission may be for any class or classes of taxable persons and not for any individual assessee,
• such class of persons may not be in a position to keep and maintain accounts in accordance with the provisions based on some reasons or hardship,
• Commissioner/chief commissioner may consider and grant permission after reasons to be recorded in writing,
• It appears that permission may be granted on an application by concerned class (es) of persons as there is no mention of suo-moto permission.

(To be continued...)