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

Gopal Pharma Pvt Ltd's server crashed in a flood, and the company had no back-up. Its CFO makes four statements. Based only on the text of Rule 57 on electronic records, which statement is correct?

The absence of a back-up is a lapse. Rule 57(1) requires proper electronic back-up to be maintained so that, if records are destroyed by accidents or natural causes such as a flood, the information can be restored within a reasonable period. Natural causes do not excuse the obligation.

  1. ANo breach arises, because natural causes exempt the company from the back-up obligation
  2. BThe Rule requires back-up to be maintained so that information can be restored after destruction by accidents or natural causes, so the absence of a back-up is a lapse in complying with itCorrect
  3. CThe Rule requires back-up only if the officer demands it in writing before the destruction
  4. DThe Rule requires records to be kept only in hard copy, so the flood is irrelevant

Explanation

Rule 57(1) requires proper electronic back-up to be maintained and preserved precisely so that, in the event of destruction through accidents or natural causes, the information can be restored within a reasonable period. Natural causes are therefore the reason for the requirement and not an exemption from it.

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