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CA Final · Indirect Tax Laws · Accounts and Records; E-way Bill

Arjun Enterprises, a registered person, keeps electronic records. An officer demands records on 10 June. The firm's one back-up was kept on a server in the same office that flooded last month, and the firm cannot restore data for April. It argues that it did produce all available records, duly authenticated, in electronically readable format. Which assessment fits the CGST Rules provision on electronic records?

The firm met the production requirement for what it had but failed the separate duty to keep a proper electronic back-up allowing restoration within a reasonable time after accidents or natural causes. A flood is the very event the back-up must guard against, so it is no excuse.

  1. AProduction of authenticated available records satisfies the rule, so the back-up lapse is irrelevant
  2. BThe firm complied with the production requirement for available records but failed the requirement to maintain proper back-up enabling restoration within a reasonable period after accidents or natural causesCorrect
  3. CThe firm has complied fully because a flood is a natural cause and exempts it from all record obligations
  4. DThe firm is in breach only if it also failed to give passwords of files

Explanation

The back-up obligation is separate from the production obligation. A back-up in the same office is destroyed with the original in a flood, so information cannot be restored within a reasonable time, which is exactly what the rule aims to prevent. Natural cause does not exempt the person; it is the very event the back-up must guard against. Producing authenticated records does not cure the back-up failure.

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