Highlight on use of digital signature

HIGHLIGHT ON USE OF DIGITAL SIGNATURE

• The government of India has in the recent past launched its dream initiative of ‘Digital India’ which promises to integrate the government departments and the people of India ensuring that the government services are made available to citizens electronically and thereby increasing the work efficiency and reducing the paperwork.

Use of Digital Signature and Maintenance of Electronic Records under Central Excise & Service Tax

• In order to implement the said initiative, steps were taken by the Central Board of Excise and Customs Central Excise in the union budget 2015 wherein Notification No. 8/2015-CENT was issued to provide that:
• The records may be preserved in electronic form and every page of the record so preserved shall be authenticated by means of a digital signature.
• An invoice issued by a manufacturer may be authenticated by means of a digital signature.
• Provided that where the duplicate copy of the invoice meant for the transporter is digitally signed, a hard copy of the duplicate copy of the invoice meant for transporter and self-attested by the manufacturer shall be used for transport of goods”
• A similar amendment was also introduced in the Service Tax Rules, 1994 vide Notification No. 5/2015-ST. Further, it was informed that the board may, by notification, specify the conditions, safeguards, and procedures to be followed by an assessee preserving digitally signed records or issuing digitally signed invoices.
• In order to give effect to the above amendments, CBEC has recently issued a notification No. 18/2015 CE NT dated 06.07.2015 providing the conditions, safeguards, and procedures to have complied. This article is intended to provide insights of the said conditions and its practical applicability as explained below:

Type of Digital Signature Certificate (DSC) to be obtained

• Every assessee proposing to use digital signature shall use a Class 2 or Class 3 Digital Signature Certificate duly issued by the Certifying Authority in India.

Prior intimation to AC/DC

Every assessee proposing to use digital signatures shall intimate the following details to the jurisdictional AC/DC, at least 15 in advance:

• Name, e-mail id, office address, and designation of the person authorized to use the digital signature certificate;
• Name of the Certifying Authority;
• Date of issue of digital certificate and validity of the digital signature with a copy of the certificate issued by the Certifying Authority along with the complete address of the said Authority

Intimation of change in details

• In case of any change in the details submitted to the jurisdictional AC/DC, complete details shall be submitted afresh within 15 days of such change.

Intimation even if already using digital signature

• Every assessee already using digital signature shall intimate to the jurisdictional AC/DC, the above details within 15 days of issue of this notification.
• Although Central excise and service tax law has now explicitly provided for the use of digital signature/maintenance of electronic records the same was followed by many assesses even before the existence of the said amendment, as digital signature/digital maintenance of records were given legal validity under section 4 of Information technology act, 2000 which overrides all other laws.
• For all such assesses already using digital signatures, it is advised to intimate at the earliest, even though the last date of intimation (i.e. July 21, 2015) has already elapsed.
• This intimation is only required for the assesses already using digital signatures. It is not required for assessments already using electronic records.

Separate electronic records for each registration

• It is specified that every assessee opting to maintain electronic records having more than one factory or service tax registration then shall maintain separate electronic records for each factory or each service tax registration.
• In this regard, the following must be noted:
• Separate Daily Stock Accounts in electronic form must be maintained for each factory;
• Separate output tax computations, CENVAT register must be maintained for each registered premises;
• This requirement is only for electronic maintenance of records and not for digital signatures, therefore a single digital signature shall suffice even for multiple registrations of the same assessee.

Submission of electronic records through e-mail or electronic storage device

• Every assessee opting to maintain records in electronic form, shall on request by a Central Excise Officer in a letter or e-mail, produce the electronic records/invoices through e-mail or on a specified storage device in an electronically readable format for verification of the authenticity of the document.
• Since the submission of records to central excise officers through e-mail is valid, therefore, further acknowledgment from the department confirming the receipt of information may not be required unless a bounce-back mail is received intimating the non-delivery of such e-mail.
• In case information is submitted in a specified storage device, then in order to safeguard the self-interest, it is advised to specifically obtain the acknowledgment of receipt on a letterhead duly stamped and signed by the respective departmental officer clearly specifying the confirming the receipt of the information in electronic form.

Print-outs of the electronic records to be submitted during audit, investigation, etc.

• Central Excise Officer may during an inquiry, investigation, or audit, under the provision of Central excise or service tax law may request an assessee to furnish duly signed printouts of the records in electronic form.

Preservation of e-records for a period of 5 years

• Every assessee opting to maintain records in electronic form shall ensure that appropriate backup of records in electronic form is maintained and preserved for a period of 5 years immediately after the FY to which such records pertain.

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