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CMA Final · Indirect Tax Laws and Practice · Accounts and Records

Mehta Industries, with an unaccounted stock of goods found, is dealt with under section 35(6) of the CGST Act, 2017, for failure to account for goods as required by section 35(1). Which statement is correct?

The proper officer determines the tax payable on the unaccounted goods as though the registered person had supplied them. The determination follows section 73, 74 or 74A, whichever applies to the case, with necessary changes. It is not limited to section 73 and needs no prior additional-accounts notification.

  1. AThe proper officer determines tax on the unaccounted goods as if supplied by the person, applying section 73 or 74 or 74A as the case may be, mutatis mutandisCorrect
  2. BThe goods are confiscated and no tax is determined
  3. CThe Commissioner must first notify the person to maintain additional accounts before any tax is determined
  4. DTax is determined only under section 73, regardless of the facts

Explanation

Section 35(6), subject to section 17(5)(h), lets the proper officer determine tax on goods or services not accounted for as if they had been supplied by the person, applying section 73 or 74 or 74A, as the case may be, mutatis mutandis. The choice depends on the case, so applying section 73 always is wrong. Notification of additional accounts under 35(3) is not a precondition.

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