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

Ganga Traders, a registered person, loses its electronic accounting data in a fire. It had kept a back-up only on a pen drive in the same office, which also burned. An officer demands records. Which statement best fits the provisions of the electronic records rule?

The rule is not satisfied. The back-up must be preserved so that information can be restored within a reasonable time even after destruction by accidents or natural causes. A pen drive kept in the same office and destroyed in the same fire does not achieve that purpose.

  1. AThe rule is satisfied, since a back-up existed on a pen drive
  2. BThe rule is not satisfied, because the back-up was not preserved in a manner enabling restoration of information after destruction by accidents or natural causesCorrect
  3. CThe rule is satisfied, because the destruction was accidental and the rule does not apply to accidents
  4. DThe rule requires only that records be produced in hard copy, so the loss is irrelevant

Explanation

Rule 57(1) requires back-up to be maintained and preserved so that, if records are destroyed by accidents or natural causes, the information can be restored within a reasonable period. A back-up stored in the same place and destroyed together with the originals cannot achieve this. The rule is aimed precisely at accidents, so the accident gives no exemption.

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