Last updated: January 5th, 2023 3:59 PM

Consequence of non-maintenance of Books of Accounts under GST

Goods and Services Tax Law mandates every registered person to maintain true and correct books of accounts and records. Non-maintenance of the same may hold the defaulter liable to penalty and even confiscation of goods. The present article explains the provisions relating to maintenance of books of accounts and highlights the consequences for non-maintenance of the same.

Provisions governing the maintenance of books of accounts under GST-

Combine reading of both Section 35 of the Central Goods and Services Tax Act, 2017 and Rule 56 of the Central Goods and Services Tax Rules, 2017 mandates the registered person to maintain true and correct accounts of the following-

A provision which mandates maintaining of accounts	List of accounts to be maintained
Section 35(1)	Production/ manufacture of the goods (i.e., Production Register)
	Inward as well as outward supply of goods or services or both (i.e., Sale/ supply Register)
	Stock of goods (i.e., Stock Register)
	Input Tax Credit availed (i.e., ITC Register)
	Output tax payable and paid
	Any other prescribed particulars
Rule 56	Goods or services imported/ exported
	Supplies attracting tax on reverse charge basis along with relevant documents
	Invoices (tax invoice as well as revised tax invoice)
	Bill of supply
	Delivery challan
	Credit notes
	Debit notes
	Receipt voucher, payment voucher and refund voucher
	Complete details (opening balance, receipt, supply, goods destroyed etc. and closing balance) of raw material, finished goods, scrap and wastage
	Advances received, paid and its adjustments
	Details of tax payable, tax collected and tax paid
	Name and complete address of supplier and customer
	Address of the premises used for storing of the goods

Further, provisions of section 36 of the Central Goods and Services Tax Act, 2017 requires the registered person to retain the books of accounts till the following period-

Particulars	Period for which books of accounts are to be retained
In case of appeal, revision, proceedings or investigation	Till one year after final disposal of the appeal, revision, proceedings or investigation.
In any other case	Till seventy-two months from the due date of filing of an annual return.

Importantly for the registered person having more than one registered place of business is required to keep the accounts of each place of business at their respective locations. The registered person is permitted to maintain the accounts and other particulars in both electronic forms as well as manual form.

Consequence of non-maintenance of the books of accounts-

In case of failure in maintaining books of accounts as per section 35(1), the proper officer will determine the tax payable on unaccounted goods/ services under provisions of section 73 or section 74. Further, as per penalty section 122(1)(xvi), failure in keeping/ maintaining the books of accounts will be liable to a penalty higher of INR 10,000 or an amount of tax involved.

Non-maintenance of books of accounts vis-à-vis confiscation provisions-

Provisions of section 130 of the Central Goods and Services Tax Act, 2017 empowers the confiscation of goods as well as levy of penalty. Accordingly, as per provisions of section 130(1)(ii), the defaulter will be liable to confiscation of goods and penalty under section 122, if the person fails to account for any goods, on which the person is liable to pay tax. In this regard, reference can be made to the judicial ruling of Metenere Ltd. Vs. Union of India. Wherein, the primary argument pertained to the non-maintenance of books of accounts/ records leading to confiscation of goods.