PRESERVATION OF RECORDS IN ELECTRONIC

[Dr. Sanjiv Agarwal]

Preservation of Records in Electronic form [Sub-rule (4) and (5) of Rule 5]

Vide Notification No. 5/2015-ST dated 1.3.2015, sub-rules (4) and (5) have been inserted in Rule 5 of Service Tax Rules, 1994 providing an option of maintaining records in electronic form and their authentication by means of digital signature.

Sub-rules(4) and (5) inserted in Rule 5 provide for as follows :

“(4) Records under this rule may be preserved in electronic form and every page of the record so preserved shall be authenticated by means of a digital signature.

(5) The Board may, by notification, specify the conditions, safeguards and procedure to be followed by an assessee preserving digitally signed records.

Explanation - For the purposes of rule 4C and sub-rule (4) and (5) of this rule,-

(i) The expression “authenticate” shall have the same meaning as assigned in the Information Technology Act, 2000 (21 of 2000).

(ii) The expression “digital signature” shall have the meaning as defined in the Information Technology Act, 2000 (21 of 2000) and the expression “digitally signed” shall be construed accordingly.”

Thus, new rules provide for as follows -

1. Records can be preserved in electronic form
2. The mode of maintaining records in electronic form is optional
3. Every page of records preserved in electronic form shall be have to be authenticated by means of digital signature.
4. CBEC shall specify the conditions, safeguards and procedure to be followed by assessees opting to preserve records which are digitally signed
5. 'Authentication' and 'digital signature' shall have the same meanings as defined in Information Technology Act, 2000.

Authentication

As per Explanation (i) to Rule 5 of Service Tax Rules, 1994 'Authenticate' shall have the same meaning as assigned in the Information Technology Act, 2000 -

Accordingly, authentication of electronic records means as follows -

1. Subject to the provisions of this section, any subscriber may authenticate an electronic record by affixing his digital signature.
2. The authentication of the electronic record shall be effected by the use of asymmetric crypto system and hash function which envelop and transform the initial electronic record into another electronic record.

As per Wikipedia, 'authentication' is an act of confirming the truth of an attribute of a single piece of data (datum) or entity. In contrast with identification which refers to the act of stating or otherwise indicating a claim purportedly attesting to a person or thing's identity, authentication is the process of actually confirming that identity. It might involve confirming the identity of a person by validating their identity documents, verifying the validity of a Website with a digital certificate, tracing the age of an artifact by carbon dating, or ensuring that a product is what its packaging and labeling claim to be. In other words, authentication often involves verifying the validity of at least one form of identification.

As per Oxford Dictionary, 'authenticate' means to prove or show (something) to be true genuine, or valid.

Digital Signature

As per Explanation (ii) to Rule 5 of Service Tax Rules 1994, 'digital signature' shall have the meaning as defined in the Information Technology Act, 2000 and the expression digitally signed shall be construed accordingly.

Accordingly, digital signature means authentication of any electronic record by a subscriber by means of an electronic method or procedure in accordance with the provisions of section 3.

As per Wikipedia, 'digital signature' is a mathematical scheme for demonstrating the authenticity of a digital message or document. A valid digital signature gives a recipient reason to believe that the message was created by a known sender, such that the sender cannot deny having sent the message (authentication and non-repudiation) and that the message was not altered in transit (integrity). Digital signatures are commonly used for software distribution, financial transactions, and in other cases where it is important to detect forgery or tampering.

As per Dictionary.com, 'digital signature' is an encrypted digital code appended to an electronic document to verify that it was created by a known source and has not been altered.