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We all know the importance of the maintenance of the accounts under GST. The provisions related to the maintenance of the accounts are given in Section 35 of the CGST Act, 2017  and Chapter VII of the CGST Rules  2017. Here I want to throw some light on  some important provisions under GST  which in my opinion are generally overlooked by us but such are very important to follow  otherwise we will be in trouble in future. The following are the provisions:

Rule 56(3) Every registered person shall keep and maintain a separate account of advances received, paid and adjustments made thereto.

I we look into the provision of this we came to the conclusion that the legislature wanted a clear and demarcated picture of the advances and its adjustment in the books of the registered person. Therefore while preparing the accounts we have consider the compliance of the rule so that the said information must be prepared separately without mixing with other information.

Rule 56(8): Any entry in registers, accounts and documents shall not be erased, effaced or overwritten, and all incorrect entries, otherwise than those of clerical nature, shall be scored out under attestation and thereafter, the correct entry shall be recorded and where the registers and other documents are maintained electronically, a log of every entry edited or deleted shall be maintained.

Now It is very important to mention here that most of the small business entities in India are generally using the accounting software which are not so customized so that the provisions of the Rule 56(8) can be fulfilled unless specifically so customized by software company .In  my opinion the government should direct at least to most popular software vendor companies to effectively carry out such customization.

Rule 56(9) :  Each volume of books of account maintained manually by the registered person shall be serially numbered.

In this context we can say that the in large number of small business entities cash book, bank book,  ledgers etc. are used as serially numbered but  day book and other primary records are not used as such . This practice must be changed immediately to effect the correct implementation of the law.

Rule 56(10) Unless proved otherwise, if any documents, registers, or any books of account belonging to a registered person are found at any premises other than those mentioned in the certificate of registration, they shall be presumed to be maintained by the said registered person.

This rule has certainly given vide powers in the hands of the authorities because if the authorities finds any material which relates to the registered person during the search , inspection or any other similar exercise in the premises of the any third person which relates with the registered person then such documents will treated as maintained by the that registered person only. This is some thing very effective powers are given in the hands of the authorities ,  meaning thereby that the authorities can levy tax and penalties on the basis of the documents , records found other than registered person place and which have a direct or indirect relation with the registered person, unless otherwise proved.

Rule 56 (13) Every registered person supplying services shall maintain the accounts showing quantitative details of goods used in the provision of services, details of input services utilised and the services supplied.:

It has been seen that many small service providers  do not maintain the quantitative details of the goods used or consumed in the provision of the services . In India in general the maintenance of the stock records are poor and this practice should be done away to avoid the penal legal consequences.

Rule 56 (15) The records under the provisions of this Chapter may be maintained in electronic form and the record so maintained shall be authenticated by means of a digital signature.

This is another rule which is generally overlooked by the most the small and medium sized enterprises that every electronic record must be authenticated by the means of the digital signature.

Rule 56(16) Accounts maintained by the registered person together with all the invoices, bills of supply, credit and debit notes, and delivery challans relating to stocks, deliveries, inward supply and outward supply shall be preserved for the period as provided in section 36 (Seventy Two Months) and shall, where such accounts and documents are maintained manually, be kept at every related place of business mentioned in the certificate of registration and shall be accessible at every related place of business where such accounts and documents are maintained digitally.

According to this rule and section 36 of the CGST Act 2017 the period of retention of books of accounts(as defined in this rule) is six years from the due date of furnishing of annual return for the year pertaining to such accounts and records . Now look at the provision by taking an example that if the books of accounts relates to the F.Y.2019-20 then the due date of the annual return will be 30th September 2020 and the books must be retained until and up to 31st October 2026.

Rule 57(1) Proper electronic back-up of records shall be maintained and preserved in such manner that, in the event of destruction of such records due to accidents or natural causes, the information can be restored within a reasonable period of time.

The rule 57(1) cast responsibility upon the registered person for the proper backup of the electronic records maintained by him . In small enterprises , the practice of data backup is generally lacking and much  attention is not  given regarding the disaster management. Thus we must give the due attention to his factor and which is of course now the requirement of the law also.

We are seeing , now a days, number of frauds taking place in all around of us and day by day government is tightening noose to prevent possible  tax evasion. Further since the introduction of GST government is not so rigid due to the new law and technical glitches in the GST network and other practical difficulties  faced by the genuine tax payers. But in coming days we hope that the government will come up with the several measures to control and prevent the tax evasion. So we have to prepare for more stringent tax enforcement . Here  I want to mention one thing that requirements prescribed by the GST Act are in addition to other rules regulations in other statutes.

Disclaimer: The contents of this article are for information purposes only and does not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up.  The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that Author / TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.

(About the author – The author is a member of ICAI and can be reached at Email: nikhilkumarca@gmail.comMobile: 09936424523, , Twitter : @CA_NikhilKumar, FB: canikhillko  Office: Flat No. 102, First Floor, Vasundhra Complex, Ring Road, Sector-16, Indira Nagar, Lucknow-226016 , U.P., India)

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May 2024