[Opinion] Checklist of Accounts, Records & Documents to be maintained from GST Audit Perspective

CA Mahadev R, CA Ravi Kumar Somani & CA Yash Shah – [2022] 145 taxmann.com 252 (Article)

1. Introduction

In any tax law, there would be an enhanced focus on the various accounts, records, and documents to be maintained so that there exists an appropriate trail of transactions undertaken by the assessee, which are maintained properly. As an important requirement under GST Audit, there was an onus on the professionals i.e., CA/CMA to verify the completeness, correctness, and compliance of the various accounts and records maintained and any deviations thereon need to be reported as an observation, comment, or qualification in Part B of the Form GSTR 9C while certifying the audit till FY 2019-20. With the abolition of audit certification and the introduction of self-certification by the taxpayer, this onus of reporting is shifted on the taxpayers.

2. Various Records to be maintained

In order to understand various records that are to be maintained, reference needs to be given to sec 35(1) of the CGST Act, 2017 wherein it is provided that every registered person shall keep and maintain, at his principal place of business, a true and correct account of:

(a) Production or manufacture of goods: Every registered person manufacturing goods shall maintain monthly production accounts showing 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.

(b) Inward and outward supply of goods or services or both.

(c) Stock of goods: Further, every registered person, other than a person covered under the composition scheme, shall maintain the accounts of stock in respect of goods received and supplied by him, and such accounts shall contain particulars of the opening balance, receipt, supply, goods lost, stolen, destroyed, written off or disposed of by way of gift or free sample and the balance of stock including raw materials, finished goods, scrap, and wastage thereof.

(d) Input tax credit availed.

(e) Output tax payable and paid and a separate account of advances received, paid, and adjustments made thereto.

(f) Such other particulars as may be prescribed – Rule 56 prescribes the same, which has been discussed in a later part.

(g) It is critical to note here that if any taxable goods are found to be stored at any place(s) other than those declared as above without the cover of any valid document, the proper officer can determine the amount of tax payable on such goods as if such goods have been supplied by the registered person.

(h) Every registered person executing works contract would keep separate accounts for works contract showing –

i. The names and addresses of the persons on whose behalf the works contract is executed.
ii. Description, value, and quantity (wherever applicable) of goods or services received for the execution of the works contract.
iii. Description, value, and quantity (wherever applicable) of goods or services utilized in the execution of the works contract.
iv. The details of payment received in respect of each work contract; and
v. The names and addresses of suppliers from whom he received goods or services.

(i) Further, any person having custody over the goods in the capacity of a carrier or a clearing and forwarding agent for delivery or dispatch thereof to a recipient on behalf of any registered person would maintain true and correct records in respect of such goods handled by him on behalf of such registered person and would produce the details thereof as and when required by the proper officer.

(j) Every agent shall maintain accounts depicting the-

i. Particulars of authorization received by him from each principal to receive or supply goods or services on behalf of such principal separately.
ii. Particulars including description, value, and quantity (wherever applicable) of goods or services received on behalf of every principal.
iii. Particulars including description, value, and quantity (wherever applicable) of goods or services supplied on behalf of every principal.
iv. Details of accounts furnished to every principal; and
v. Tax paid on receipts or supply of goods or services effected on behalf of every principal.

(k) The owner or the operator of the godown shall store the goods in such a manner that they can be identified item-wise and owner-wise and would facilitate any physical verification or inspection by the proper officer on demand.
Now going by the details prescribed in Rule 56 – Every registered person shall keep the particulars of –

i. Names and complete addresses of suppliers from whom he has received the goods or services chargeable to tax under the act.
ii. Names and complete addresses of the persons to whom he has supplied goods or services.
iii. The complete address of the premises where goods are stored by him, including goods stored during transit along with the particulars of the stock stored therein.

Section 35(2) provides that every owner or operator of a warehouse or godown or any other place used for storage of goods and every transporter, irrespective of whether he is a registered person or not, shall maintain records of the consigner, consignee, and other relevant details of the goods in such manner as may be prescribed.

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