RECORDS IN GST REGIME_ELECTRONIC Vs PHYSICAL

[CA.Ram Akshya]

1. Introduction

Maintenance of books of account and documentation is one of the important compliance requirement under any tax law. The tax payer or the assessee is required to record all transactions in his books of account and keep all the documents entered into for any transaction in safe custody up to a particular period of time. Different tax law specifies different period for which records, documents etc. should be preserved. Further, the correct assessment, audit, verification of compliances are based on proper maintenance of books of accounts and records keeping. Goods and Service Tax (GST) is mainly self-assessment based system where the registered person is required to assess his liability and pay it by filing applicable returns. Off course, the basis for this is underlying records for a particular transaction. The GST law has also prescribed documents required to be issued by different kinds of suppliers under various situations/types of transactions. Chapter VIII of CGST Act, 2017 talks about accounts and records requirement under GST law for a registered person along with rules prescribed under the Act.    

2. Meaning of Documents, Books of Accounts, Electronic Record

The CGST Act, 2017 has given inclusive definition of ‘documents’. The ‘books of accounts’, ‘book or paper’ and ‘documents’ have been also defined under Companies Act, 2013. We have reproduced below the same for reader’s ready reference purposes:

• As per Section 2(47) of CGST Act, 2017, “document includes written or printed record of any sort and electronic record as defined in clause (t) of section 2 of the Information Technology Act, 2000.”
• As per Section 2(t) of the Information Technology Act, 2000, “electronic record’ means data, record or data generated, image or sound stored, received or sent in an electronic form or micro film or computer generated microfiche.”
• As per Section 2(12) of Companies Act 2013, “book and paper’ and ‘book or paper’ include books of account, deeds, vouchers, writings, documents, minutes and registers maintained on paper or in electronic form.”
• As per Section 2(13) of Companies Act 2013, “books of account’ includes records maintained in respect of-

(i) all sums of money received and expended by a company and matters in relation to which the receipts and expenditure take place;

(ii) all sales and purchases of goods and services by the company;

(iii) the assets and liabilities of the company; and

(iv) the items of cost as may be prescribed under section 148 in the case of a company which belongs to any class of companies specified under that section.”

• As per Section 2(36) of Companies Act 2013, “document includes summons, notice, requisition, order, declaration, form and register, whether issued, sent or kept in pursuance of this Act or under any other law for the time being in force or otherwise, maintained on paper or in electronic form.”

Basis the above, it may be summarised that the ‘document’, ‘record’ and ‘books of account’ are a broader term. The term ‘documents’ will include all data, records, forms, registers, legal documents like notices, summons, deeds, declarations, orders etc. maintained under any law whether in written, printed or in electronic form. Similarly, ‘books of account’ is a term having very wide meaning and scope. Accordingly, it includes all the records maintained in respect of money, sales, purchases, assets, liabilities and items of cost.  For example, ‘books of account’ includes fixed asset register, journals, sales ledger, purchase ledger, cash book etc.

3. Maintenance of electronic records

The records under GST law may be maintained in physical form as well as in electronic form. In case, it is maintained in electronic form, the GST law requires that it shall be authenticated by digital signature. The books of accounts includes any electronic form of data stored on any electronic device. In case, there is any change in the registers and other documents maintained electronically, a log of every entry edited or deleted is required to be maintained. Further, proper electronic back up of all the records is required to be maintained and preserved so that in case of destruction of such records due to any reason, it may be restored within a reasonable period of time. The person maintaining electronic records is to submit the relevant records, documents in hard copy or in electronic readable format, duly authenticated by him to the appropriate authority if demanded. Further, the details of files stored electronically, password of such files and explanation for codes used etc. is also required to be provided on demand.

4. Location of maintenance of books of accounts

The GST law requires every registered person to maintain the books of accounts at his places of business respectively. In case, there is multiple business locations in a State, the books of accounts pertaining to principal place of business is required to be kept at principal place of business and those pertaining to additional place of business is to be kept at respective additional place of business. It is to be noted that the books of accounts, records, documents etc. may be in physical form as well as in electronic format stored in electronic device.

In case, a registered person has kept any documents, registers or any books of accounts at a premises other than those mentioned in the certificate of registration, it shall be presumed to be maintained by him.  

5. Details of accounts and other records to be maintained

The GST law requires a registered person to keep and maintain a true and correct books of accounts and records at his respective place/places of business as mentioned in the registration certificate.  In case, there are more than one place of business specified in the certificate of registration, the accounts relating to each place of business shall be kept at such place of business. Accordingly, every registered person is to keep and maintain the account of:

1. Manufacture of goods

• To maintain monthly production accounts showing quantitative details of raw material or services used in the manufacture and quantitative details of goods so manufactured including waste and by-products

2. Inward & outward supply of goods or services
3. Stock of goods
4. Input tax credit availed
5. Output tax payable and paid

• It should contain the details of tax payable including payable as per Section 9(3) & Section 9(4), tax collected and paid, input tax, input ta credit claimed together with a register of tax invoice, credit notes, debit notes, delivery challan issued or received during any tax period

6. Import or export
7. Supplies attracting payment of tax on reverse charge basis
8. Relevant documents including invoices, bills of supply, delivery challans, credit notes, debit notes, receipt vouchers, payment vouchers and refund vouchers
9. A separate account of advances received, paid and adjustments made thereto
10. Stock of goods received and supplied

• It should contain particulars of opening balance, receipt, supply, goods lost, stolen, destroyed, written off, gifted, free samples and closing balance including raw material, finished goods, scrap and wastage thereof.

11. Names and complete address of suppliers from whom received supplies chargeable under the Act
12. Names and complete address of persons to whom supplies made
13. Complete address of the premises where goods are stored by him, including goods stored during transit along with particulars of stock stored therein
14. Supplier of service should maintain the accounts showing quantitative details of goods used in the provision of services, details of input services utilised and the service supplied

The Commissioner has the power to notify class of taxable persons to maintain additional accounts or documents for the purposes specified therein.

6. Period of preservation of accounts

Every registered person who is required to keep and maintain books of accounts or other records as per GST law shall preserve the same till the expiry of seventy two months (six years) from the due date of furnishing the annual return. The due date of filing of annual return is 31^st December from the end of the relevant financial year. Thus, the books of accounts or other records must be preserved at least seventy nine months from the end of the relevant financial year.

In case, there is any appeal or revision or investigation or any other proceeding/case going on, the books of accounts and other records pertaining to such proceeding is required to be preserved for a period of one year after final disposal of such proceeding/case or till the expiry of seventy two months from 31st December of relevant financial year, whichever is later.

7. Conclusion

From the above, it is derived that the GST law has extensive accounting and record keeping requirements. However, the more cumbersome excise law requirements applicable for manufacturing entities have been removed under GST law. So, it is the duty of professionals to understand the requirements of books of accounts, other records to be maintained under GST law and ensure it’s compliance by advising their clients. Further, it is to be noted that under GST law, there is provision of ‘Compliance Rating’ to be given by the Govt. basis certain parameters and compliance rating to be flashed on the GSTN portal for public information. It is purely based on the compliances undertaken by the assessees. Any non-compliance will have adverse effect on the business of the registered person. Therefore, all registered persons must ensure to maintain proper books of account and other records as prescribed under GST law for the specified period of time to avoid penal action as well as for the purpose of survival in the extremely competitive market.

(The author is Associate Director-IDT, SS Kothari Mehta & Co, New Delhi and the views expressed are strictly personal)