CA Final · Indirect Tax Laws · Accounts and Records; E-way Bill
Neelkanth Pharma Ltd lost its primary accounting server to a flood. The company had taken a back-up, but restoring it took the IT team a very long time with no justification, and the proper officer's demand for records went unmet for months. Which assessment is most consistent with the CGST Rules, 2017?
The company is non-compliant in substance. The Rules require back-up to be maintained and preserved so that, if records are destroyed by accidents or natural causes, information can be restored within a reasonable period. A back-up that takes unjustifiably long to restore does not meet this standard.
- ACompliant, because any back-up, however slow to restore, satisfies the rule
- BCompliant, because natural causes exempt the company from producing records
- CNon-compliant only if the loss was caused by accident and not by natural causes
- DNon-compliant in substance, because the back-up must be preserved so that information can be restored within a reasonable period of timeCorrect
Explanation
The rule requires back-up maintained and preserved in a manner that allows restoration within a reasonable period. Merely having a back-up that cannot be restored in reasonable time does not meet that standard. Natural causes are the very situation the back-up is meant to cover and do not remove the duty to produce records on demand. The accident-versus-natural distinction in option C is irrelevant.
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