CMA Final · Indirect Tax Laws and Practice

Accounts and Records under GST for CMA Final

Accounts and Records is the GST chapter on what books a registered person must keep, where, in what form and for how long. Section 35 sets the duty, Rule 56 gives the detail, Rule 57 covers electronic records, and Section 36 sets retention. Learn the lists, places, periods and consequences, then apply them to cases.

What this chapter covers

This chapter answers a practical question: what must a registered person record, and how must it be kept so an officer can verify the tax? Section 35 of the CGST Act sets the core duty. A registered person keeps a true and correct account of production or manufacture, inward and outward supplies, stock, input tax credit availed, and output tax payable and paid. Rule 56 adds the detail: stock registers, advances, supplier addresses, and special accounts for agents, manufacturers, service providers and works contractors.

The second half covers form and duration. Rule 57 deals with electronic records: back-up, producing records on demand, and giving access details. Section 36 sets retention. Then Section 66 and Rule 102 on special audit by a chartered accountant or cost accountant are linked, which matters for you as a cost accountant. Section 35(6) shows what happens if goods or services are not accounted for.

This chapter connects to the rest of Paper 19. Registration decides the principal and additional places of business. Invoices, credit and debit notes, reverse charge, input tax credit and composition levy all appear in the records. Assessment, demand under sections 73, 74 and 74A, and audit use these records as evidence. If you know this chapter well, those later chapters become easier to follow.

The chapter is compact and fact-based, which makes it good for MCQs. Examiners can test a list, a time limit or a condition, such as who is exempt from keeping stock accounts or how long records must be kept. The same content also supports written case questions, where you must say which record was missing, what the officer can do, and what the registered person should have done. Because you are a cost accountant, special audit questions are directly relevant. Since the rules are precise, careful study gives reliable marks.

Accounts and Records: topics in the order to study them

1Accounts and Records under Section 35 of CGST ActStart with the Act, because it states the basic duty, the place of keeping, and the consequence in Section 35(6) that the rules build on.
2Rule 56 Maintenance of Accounts by Registered PersonsRule 56 is the longest part and fills in the detail of Section 35, so study it once the basic duty is clear.
3Generation and Maintenance of Electronic Records (Rule 57)It is short and builds on Rule 56's electronic-form provisions, including back-up and production on demand.
4Retention Period, Audit and Special CasesStudy this last, as it uses the earlier ideas: how long the records stay, how Section 66 and Rule 102 special audit works, and other special cases.

How to prepare Accounts and Records

This is a rule-heavy chapter, so aim for exact recall with understanding of why each record exists.

Read Section 35(1) and write its six heads (a) to (f) from memory, then check them.
Note the provisos: more than one place of business, and electronic form. Learn sub-sections (2), (3), (4) and (6) separately.
Split Rule 56 into groups: general accounts, stock, advances, tax account, supplier details, then special persons such as agents, manufacturers, service providers, works contractors and carriers. Make one line per group.
Mark which rule parts do not apply to a person paying tax under section 10 (stock account in sub-rule (2) and tax account in sub-rule (4)).
Learn Rule 57 and Section 36 as a table of items and periods, including the proviso extending retention for appeals and investigations.
Learn Section 66: who may direct, with whose approval, the 90 days plus a further 90, the hearing right and who pays expenses. Link it to Rule 102 forms.
Practise MCQs and short cases: for each, name the provision, the duty and the consequence.

Common mistakes in Accounts and Records

Treating Rule 56(2) and (4) as applying to every registered person.
Fix: Note that stock accounts and the tax account in those sub-rules exclude a person paying tax under section 10.
Giving the wrong retention period or starting point.
Fix: Remember: 72 months from the due date of furnishing the annual return for that year, with the proviso for appeals and investigations.
Mixing who nominates the special audit professional.
Fix: Under Section 66 the Commissioner nominates a chartered accountant or cost accountant, and the Commissioner determines and pays the expenses.
Ignoring the Section 66 conditions in case questions.
Fix: State the trigger: value not correctly declared or credit availed not within normal limits, with the right rank and prior approval.
Saying electronic records need no extra care.
Fix: Quote Rule 57: back-up, authenticated production on demand, and access details. Rule 56(8) also needs a log of edits and deletions, and Rule 56(15) needs a digital signature.
Forgetting special-person accounts in Rule 56.
Fix: Revise agents, manufacturers, service providers, works contractors and carriers or clearing and forwarding agents as a separate list.

Last-day revision: Accounts and Records

Section 35(1): keep accounts at the principal place of business as shown in the registration certificate.
Where there are several places of business, accounts of each are kept at that place.
Section 35(1) heads: production or manufacture, inward and outward supplies, stock, ITC availed, output tax payable and paid, and other prescribed particulars.
Warehouse owners and transporters must keep consigner and consignee records whether registered or not.
Section 35(6): unaccounted goods or services are taxed as if supplied by the person, using section 73, 74 or 74A.
Rule 56(2) and (4) do not apply to a person paying tax under section 10.
Rule 56(8): no erasing or overwriting; incorrect entries other than clerical ones are scored out under attestation; electronic edits need a log.
Rule 57: keep electronic back-up, produce authenticated records on demand, and give access details and a printed sample.
Section 36: retain records for 72 months from the due date of the annual return for that year.
Appeal, revision, proceedings or investigation: keep the related records for one year after final disposal, or the normal period, whichever is later.
Section 66: officer not below Assistant Commissioner, prior approval of the Commissioner, audit by a chartered accountant or cost accountant nominated by the Commissioner.
Special audit report within 90 days, extendable by 90 days; Rule 102 uses FORM GST ADT-03 for direction and ADT-04 for findings.

Accounts and Records practice questions

Accounts and Records in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Accounts and Records: frequently asked questions

Where must a registered person keep accounts under GST?

At the principal place of business shown in the certificate of registration. If more than one place is shown, the accounts for each place are kept there. Electronic records must be accessible at each related place.

How long must GST records be retained?

Until 72 months have passed from the due date of furnishing the annual return for the year of those records. If you are party to an appeal, revision or other proceedings, or under investigation for an offence under Chapter XIX, keep the related records for one year after final disposal or for that period, whichever is later.

Can a cost accountant conduct a GST special audit?

Yes. Under Section 66, a chartered accountant or a cost accountant nominated by the Commissioner may be directed to audit the records. The report goes to the Assistant Commissioner within 90 days, extendable by another 90 days.

What happens if a registered person fails to account for goods or services?

Under Section 35(6), the proper officer determines the tax on the unaccounted goods or services as if the person had supplied them. Section 73, 74 or 74A applies, as the case may be, to determine that tax.

Is this chapter more important for MCQs or written answers?

Both. MCQs test lists, periods and conditions. Written questions test whether you can apply the rule to a case and name the consequence.