Access to Business Premises – Section 71 of GST

Businesses registered under the GST regime in India must comply with various statutory requirements, including the maintenance of proper records and making them accessible to GST authorities when needed. One of the important provisions related to compliance and transparency under the CGST Act is Section 71 – Access to Business Premises. This section empowers GST officers to access and inspect the business premises of registered taxpayers, ensuring adherence to GST laws and safeguarding the revenue interest of the government.

Understanding Section 71 of the CGST Act

Section 71 of the CGST Act, 2017 grants specific powers to tax officers, allowing them to inspect a taxpayer’s place of business and examine books, records, and related documentation.

Sub-section (1): Power to Access Business Premises

As per Section 71(1):

• Any GST officer, authorized by a proper officer who is not below the rank of a Joint Commissioner, is empowered to access any place of business of a registered person.

• This access is granted to inspect various records, including:

  • Books of account

  • Documents

  • Computers and related software

  • Any other relevant items available at the premises

• The objective is to conduct audits, scrutiny, verification, and other checks to ensure compliance and protect government revenue.

This provision plays a critical role in enabling the tax department to carry out effective audits and ensures that all necessary records are readily available for examination.

Sub-section (2): Obligation of the Registered Person

Section 71(2) mandates that the person in charge of the business premises must, upon demand, make the following records available for inspection:

1. Business Records: All records prepared or maintained by the registered person, as declared to the proper officer.

2. Trial Balance or Equivalent Statement: This helps in verifying the financial accuracy of the business.

3. Audited Financial Statements: Statements of annual financial accounts, where auditing is applicable.

4. Cost Audit Report: If any, prepared under Section 148 of the Companies Act, 2013.

5. Income Tax Audit Report: If applicable, under Section 44AB of the Income-tax Act, 1961.

6. Any Other Relevant Records: As may be deemed necessary by the GST authorities or audit team.

These records must be made available within fifteen working days from the date of demand. However, an extension of this time period may be granted by the concerned officer, audit party, or nominated Chartered Accountant (CA) or Cost Accountant.

Purpose and Importance of Section 71

The primary purpose of Section 71 is to:

• Ensure transparency in business operations.

• Verify that the taxpayer has properly complied with GST provisions.

• Facilitate effective auditing and scrutiny of records.

• Detect and prevent tax evasion or suppression of turnover.

• Confirm that taxes due to the government are being accurately calculated and remitted.

By granting access to business premises and documents, Section 71 enhances the efficiency and effectiveness of the compliance monitoring process under GST.

Role of Chartered Accountants and Cost Accountants

The provision also allows for the appointment of Chartered Accountants or Cost Accountants under Section 66 of the CGST Act, to assist in special audits when deemed necessary by the proper officer. In such cases, the registered person is obligated to provide full access and cooperation to these professionals for the review of records.

Compliance Requirements for Registered Taxpayers

To avoid penalties and ensure smooth audits or inspections, businesses should:

• Maintain accurate and up-to-date records as prescribed under the CGST rules.

• Ensure timely availability of records when demanded by GST authorities.

• Cooperate with officials during audits and inspections.

• Understand the legal requirements and timelines under Section 71 to avoid non-compliance.

Conclusion

Section 71 of the CGST Act is a key enforcement tool that empowers GST authorities to access and examine business premises and financial records. For registered taxpayers, understanding and complying with this provision is crucial for maintaining transparency, avoiding disputes, and ensuring smooth business operations. Regular internal audits, timely record-keeping, and readiness for inspections can help businesses stay compliant and safeguard against unnecessary legal hurdles.