Issues in respect of maintenance of books of accounts relating to additional place of business by a principal or an auctioneer for the purpose of auction of tea, coffee, rubber etc.

Circular No.: 23/23/2017-GST
Date of Circular: 21st December 2017
Relevant Sections and Rules:

• Central GST Act, 2017:
  • Section 35(1): Maintenance of books of accounts
  • Section 168(1): Power to issue instructions for uniformity

Summary of Circular:

This circular provides clarification on maintenance of books of accounts by principals and auctioneers involved in the supply of goods like tea, coffee, rubber, etc., especially when auctions are conducted at additional places of business.

1. Declaration of Warehouses as Additional Places of Business:
   • Both the principal and the auctioneer must declare the warehouses where the auction goods are stored as their additional places of business.
   • The buyer of such auctioned goods must also declare these warehouses as additional places of business if he intends to store the goods there post-auction.
2. Flexibility in Maintenance of Books of Accounts:
   • Although Section 35(1) mandates books of accounts to be kept at every place of business, the circular clarifies that:
     • Principals and auctioneers may maintain books for additional places at their principal place of business, instead of maintaining separate records at each warehouse.
     • However, they must inform their jurisdictional proper officer in writing of this arrangement.
3. Input Tax Credit (ITC) Eligibility:
   • Both the principal and auctioneer are eligible to claim ITC, provided all other conditions under GST law are met.
4. Scope Limitation:
   • This relaxation applies only where the auctioneer claims ITC on goods received from the principal and supplies are made exclusively through auction.

Source: Circular No.: 23/23/2017-GST