Section 35 of CGST Act, 2017 : Section 35: Accounts And Other Records

Explanation using Example

Imagine a scenario where Mr. Sharma owns a textile manufacturing business and is a registered person under the GST regime. He has his principal place of business in Mumbai, where he has his main office and a manufacturing unit. He also has smaller units in Pune and Nagpur.

As per Section 35 of the Central Goods and Services Tax Act, 2017, Mr. Sharma is required to maintain a true and correct account of:

• The production of textiles at his Mumbai, Pune, and Nagpur units;
• All the raw materials and finished goods he buys and sells;
• The inventory of raw materials and finished textiles at all three locations;
• The GST credit he avails on his purchases;
• The GST he needs to collect from customers and the amount he actually pays to the government;

Mr. Sharma must keep these accounts at his principal place of business in Mumbai and separate accounts for Pune and Nagpur at their respective locations.

He also opts to keep his accounts in electronic form, which is allowed under the Act, making it easier for him to consolidate his records and access them remotely.

Since Mr. Sharma's business has a turnover that exceeds the prescribed limit, he must get his accounts audited by a chartered accountant. After the audit, he submits the audited financial statements, along with a reconciliation statement and other required documents to the GST authorities.

If Mr. Sharma neglects to account for any transaction or fails to maintain records properly, the GST officer has the authority to estimate the tax liability on the unaccounted goods or services and demand payment as if these were supplied by Mr. Sharma, with potential penalties for the omission.