“A Brief Analysis of Sec 35 & Sec 36 of CGST Act 2017”

The article explains about the requirements of CGST Act and corresponding CGST Rules with respect to Accounts and records to be kept under Goods and Services Tax Law. Record keeping is an important aspect for every business and its an integral part of every legal framework. Records are important for furnishing information to Government in the form of Returns, Paying taxes, carrying out reconciliations etc.

The Goods and Services Tax was introduced in July 2017 across nation. Chapter VIII of the CGST Act 2017 addresses the various provisions regarding maintenance of Accounts and Records under Goods and Services Tax.

Sec 35 & Sec 36 of the CGST Act explains the various requirements of the act, broadly covering the following aspects of the Accounts and Records under GST Act.

1. Who is required to maintain Accounts and Records under Goods and Services Tax?

As per Sec 35 of the CGST Act 2017, every registered person is required to maintain Accounts and Records. Sec 2(94) explains the meaning of registered person as “registered person” means a person who is registered under section 25 but does not include a person having a Unique Identity Number”.

2. Where records are to be kept?

The records are required to be kept at the principal place of business of the registered person.

In case there are more than one principal place of business of the registered person, then the accounts relating to each place of business shall be kept at such places of business.

3. What type of Records are to be maintained?

The registered person is required to maintain the true, accurate and fair accounts and records off the following at his principal place of business-

(a) Production or Manufacture of goods;

(b) Inward and Outward supply of goods or services or both;

(c) Stock of goods;

(d) Input tax credit availed;

(e) Output tax payable and paid; and

(f) Such other particulars as may be prescribed

In addition to this, Rule 56 of the CGST Rules 2017 requires maintenance of following records also-

– goods or services imported or exported

– supplies attracting payment of tax on reverse charge

– invoices, bills of supply, delivery challans

– credit notes, debit notes

– receipt vouchers, payment vouchers and refund vouchers

4. Mode of Maintenance of Records?

The law has given an option to assesse for mode of maintenance of Accounts and Records i.e. the registered person may keep and maintain such accounts and other particulars in electronic form in such manner as may be prescribed.

5. Type of Records to be maintained by different classes of assesses?

The CGST Act 2017 also refers some specific provisions related to maintenance of accounts and records by some particular class of assesses i.e. in case of

– Owner or operator of warehouse

– Owner or operator of Godown

– Owner or operator of any other place used for storage of goods

– Every Transporter,

the assesses is required to maintain records of consigner, consignee and other relevant details as prescribed under CGST Rules.

It is pertinent to mention here that this clause is relevant even if the above mentioned assesses are registered assesses or not.

6. Exemptions and additional requirements of maintaining Accounts and Records?

The commissioner is empowered with some more powers as per which he can ask assesses to maintain some additional records i.e. in addition to the records already being maintained by him as per Sec 35(1) & 35(2).

Similarly in other circumstances, the commissioner can also exempt any assesse for maintaining accounts & records strictly in terms of Sec 35 on compliance of certain conditions as required by commissioner.

7. Consequences of not maintaining Accounts and Records?

In case the registered person fails to maintain proper accounts and records as mentioned above, the assessing officer shall determine the tax liability of the goods/ services not accounted for in the manner as these goods and services were supplied by the assesse and accordingly the consequential provisions of Sec 73 & 74 will be applied mutatis mutandis for determining the amount of tax.

8. Retention period of Accounts and Records?

Sec 36 of the CGST Act 2017 explains that every registered person {as per sec 35(1)} is required to retain them until the expiry of seventy-two months from the due date of furnishing of annual return for the year pertaining to such accounts and records.

9. Retention period of Accounts and Records by the assessee who is under investigation or has filed an appeal under any of the provisions of this act?

The assesse in this case shall retain the books of account and other records pertaining to the subject matter of such appeal or revision or proceedings or investigation for a period of one year after final disposal of such appeal or revision or proceedings or investigation, or for the period specified above, whichever is later

Reference definitions as given in the act-

Sec 2(41)- “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

Sec 2(43)-“electronic cash ledger” means the electronic cash ledger referred to in subsection (1) of section 49”

Sec 2(46)-“electronic credit ledger” means the electronic credit ledger referred to in sub-section (2) of section 49”

Sec 2(89)-“principal place of business” means the place of business specified as the principal place of business in the certificate of registration”

Author Bio

Qualification: CA in Job / Business
Company: M/s SML Isuzu Ltd
Location: Chandigarh, Chandigarh, IN
Member Since: 10 May 2017 | Total Posts: 43
CA Rubneet Anand B.Com, M.Com(Finance& Taxation), MBA(Finance & International Business- IMT Ghaziabad) [email protected] Deputy Manager (Internal Audit & Indirect Taxation)-M/s SML Isuzu Ltd Facebook Page- Corporate Prism-Consultation in Accounting & Corporate Managemen View Full Profile

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