DOCUMENTS, ACCOUNTS & RECORDS IN GST (PART-I)

Assessment in GST is mainly focused on self assessment by the taxpayers themselves. Every taxpayer is required to self-assess the taxes payable and furnish a return for each tax period i.e. the period for which return is required to be filed. The compliance verification is done by the department through scrutiny of returns, audit and/or investigation. Thus, the compliance verification is to be done through documentary checks rather than physical controls. This requires certain obligations to be cast on the taxpayer for keeping and maintaining accounts and records.

Statutory Provisions

The following provisions of the GST Act, 2017 are relevant for the ‘Accounts and Records’ under GST regime:

Documents

As per section 2(41) of the GST Act, 2017, ‘document’ includes written or printed record of any sort and electronic record as defined in the Information Technology Act, 2000. This definition is only an inclusive definition. As per section 2(1)(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.

Further, as per section 2(36) of the 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.

Accounts / Books of Accounts

‘Accounts’ means the preparation of record or statement of transactions or the like, a statement and explanation of one’s administration or conduct in money affairs, a statement or record of financial transactions or reckoning of money transaction, a written or printed statement of business dealing or debits and credits or certain class of them. For example, balance sheet, income statement (profit and loss account), cash flow statement etc.

‘Books or books of accounts’ means books in which business transactions are recorded, often consisting of journals, ledgers and various other records of accounts. They are normally held to be legal documents and should indicate the financial position of the business at any time. Every company including branch office or offices prepare and keep at its registered office, books of account and other relevant books and papers and financial statement for every financial year which give a true and fair view of the state of the affairs of the company and such books shall be kept on accrual basis and according to the double entry system of accounting.

As per section 2(13) of the Companies Act, 2013, ‘books of account’ includes records maintained in respect of all sums of money received and expended, all sales and purchases of goods and services, assets and liabilities and the items of cost of the company. For example, fixed asset register, journals, sales ledger, purchase ledger, cash book etc.

According to rule 5 of erstwhile Service Tax Rules, 1994, a ‘record’ included computerized data and meant the record as maintained by an assessee in accordance with the various laws in force from time to time.

The assessee should maintain such records as would enable him to –

(i)      calculate value of taxable supplies,

(ii)     calculate tax liability correctly,

(iii)    ensure that proper credit of input tax is availed.

Year

The term, ‘year’ has not been defined in GST law but it implies the financial year, i.e. 1st April of any calendar year to 31st March of the following calendar year. In India, business entities follow financial year as accounting year. The same is also mandated under the Companies Act, 2013 and Income Tax Act, 1961.

Accounts to be maintained

As per section 35(1) of the GST 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 production or manufacture of goods, of inward or outward supply of goods and/or services, of stock of goods, of input tax credit availed, of output tax payable and paid, and such other particulars as may be prescribed in this behalf.

Accordingly, a true and correct account of the following activities/transactions shall be maintained by a taxable person:

●     Production or manufacture of goods,

●     Inward or outward supply of goods and/or services,

●     Stock of goods,

●     Input tax credit availed,

●     Output tax payable and paid, and

●     Such other particulars as may be prescribed.

The accounts shall be maintained and kept at the principal place of business.

In addition, the rule 56(1) GST of the GST Rules, 2017 also provide that the registered person shall keep and maintain records of-

(a)   goods or services imported or exported or

(b)   supplies attracting payment of tax on reverse charge along with the relevant documents, including invoices, bills of supply, delivery challans, credit notes, debit notes, receipt vouchers, payment vouchers, refund vouchers and e-way bills.

Following accounts and records will have to be maintained by every registered person:

(a)   accounts of stock in respect of goods received and supplied; and such account shall contain particulars of the opening balance, receipt, supply, goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples and balance of stock including raw materials, finished goods, scrap and wastage thereof

(b)   a separate account of advances received, paid and adjustments made thereto

(c)   an account containing the details of tax payable, tax collected and paid, input tax, input tax credit claimed together with a register of tax invoice, credit note, debit note, delivery challan issued or received during any tax period

(d)   names and complete addresses of suppliers from whom goods or services chargeable to tax under the Act, have been received

(e)   names and complete addresses of the persons to whom supplies have been made

(f)    the complete addresses of the premises where the goods are stored including goods stored during transit along with the particulars of the stock stored therein

(g)   monthly production accounts showing the quantitative details of raw materials or services used in the manufacture and quantitative details of the goods so manufactured including the waste and by products thereof

(h)   accounts showing the quantitative details of goods used in the provision of services, details of input services utilised and the services supplied

Manner of Maintaining Accounts / Records

Any entry in registers, accounts and documents shall not be erased, effaced or overwritten and all incorrect entries, other 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. Further each volume of books of account maintained manually by the registered person shall be serially numbered.

            (To be continued....)

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