Validity to maintain of records and details at centralized level by the entity under GST law

This is to apprise you of a case where documents or details are not available with the taxpayer at GST registration level where entity is operating with multiple registrations:

  • Lately, a number of summons, notices and departmental audit proceedings have been initiated by the GST authorities against the registered persons (under GST law) and extensive list of documents, records and documents are being called for from them for verifying the same and perusing legal stances adopted by the taxpayers and basis the same, conducting detailed inspection and audits.
  • As per section 25 of the CGST Act: ‘Every person who is liable to be registered under section 22 or section 24 shall apply for registration in every such State or Union territory in which he is so liable within thirty days from the date on which he becomes liable to registration, in such manner and subject to such conditions as may be prescribed’. Therefore, provisions of GST law require an entity to obtain separate GST registrations for conducting its business at various states across India.

Maintain Records & Details

  • Even though most of the records like rendering of outward supply (sale of goods/ rendering of service) and expenses directly related to the particular registration are maintained by the taxpayer for respective registration, it might so happen that some records/details like central accounting, finance, payroll, technology support etc. expenses or assets utilised or liability borne commonly across all registration are not able to be bifurcated by the taxpayer at individual registration level and are maintained at consolidated level centrally at head office of the entity.
  • Taxpayer may peruse below provision for making its submissions before the investigating authority or departmental auditor:
  • As per section 35 ‘Accounts and other records’ of CGST Act 2017:

Every registered person shall keep and maintain, at his principal place of business, as mentioned in the certificate of registration, a true and correct account of:

(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: 

Provided that 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 at such places of business. 

Provided further that the registered person may keep and maintain such accounts and other particulars in electronic form in such manner as may be prescribed.’

  • It is needful to bring to your kind attention that entity conducts business operations across India and has accordingly obtained registrations in multiple number of registrations across such states under GST law. Further, entire accounting and record keeping is being done electronically through usage of an Enterprise Resource Planning (ERP) software at the centralised level in the entity and it is not feasible for the taxpayer to bifurcate some of the asset/liability/expenses at the registration level and that the records of the same are being maintained at the entity level only at central office and are available for verification and scrutiny by your good office in the like manner.
  • Additionally, we hereby humbly submit that relevant records as are mentioned under point (a)-(f) are duly maintained at registration level by the company and since, trial balance (trail balance is a list of all the general ledger accounts, both revenue and capital) is not covered under point (a)-(f), same is being duly maintained and available at entity level only. Further, in case the entity is not able to maintain records of common assets or liabilities or expenses at registration, it may submit similar plea before the authority for considering the case basis aforementioned submissions and a back-up working if any available on registration level.

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Should you require any further clarifications or details, please feel free to revert.

*Views expressed are personal in nature and are for reference purpose only. Reliance upon the above shall be made basis prior advise from a domain specialist. Author shall not be held liable for any loss caused to anyone in this regard.

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