JULY 18, 2016

By Arvind Gupta

IT is observed that so called big companies/Tax Consulting firms/MNC are issuing invoices by simply putting "Facsimile Signature” or with the remark on the invoice as "Computer Generated Invoice, No Signature Required" especially in Service Tax.

The notifications provide option for issuance of digitally signed invoices and maintenance of digital records. The mechanism for implementation of the provision was introduced via Notification No. 18/2015–CE(NT), dated 6 th July 2015 which gave effect to both Notification 5/2015-S.T, dated 1-3-2015 and Notification 18/2015-C.E.(N.T) dated 6-7-2015 detailing the conditions and procedures for issuance, preservation and authentication of the invoices and records in electronic form.

Any assessee who opts to maintain digital records and issue invoices is required to adhere to conditions provided in Notification 18. For instance, the digital certificate linked to the signature proposed to be used by the assessee has to be issued by the Certifying Authority of India. [The Certifying Authority of India shall mean to be the authorities registered with the Controller of Certifying Authorities. (Examples of such certifying authorities are Safescrypt, National Informatics Centre, emudhra, TCS, (n)code solutions, CDAC, GNFC, IDRBT & Capricorn)

In order to have further clarity, another Board Instruction F. No. 224/44/2014-CX.6 was also issued on 6th July 2015 enlisting the detailed procedure for usage, verification and controls for the usage of digital signatures.

The details of the said instructions and its practical applicability is as explained below:

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

++ Every assessee proposing to use digital signatures shall intimate the details such as 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 etc., to the jurisdictional Deputy Commissioner or Assistant Commissioner of Central Excise at least 15 days in advance.

++ Every assessee opting to maintain records in electronic form, who has more than one factory or service tax registration, shall maintain separate electronic records for each factory or each service tax registration.

++ A Central Excise Officer, during an enquiry, investigation or audit, in accordance with the provisions of section 14 of the Central Excise Act, 1944 and as made applicable to Service Tax as per the provisions contained in section 83 of the Finance Act, 1994, may direct an assessee to furnish printouts of the records in electronic form and invoices and may resume printouts of such records and invoices after verifying the correctness of the same in electronic format; and after the print outs of such records in electronic form have been signed by the assessee or any other person authorised by the assessee in this regard, if so requested by such Central Excise Officer.

But, as mentioned, many companies are simply putting facsimile signature or simply printing "Computer generated invoice- No Signature required" as a measure of simplicity and flexibility.

It is a bonafide belief that Companies of higher repute will not commit any error, but it is not always true.

There is huge GAP in understanding that all electronic signatures, i.e., e-signatures as for instance, facsimile signature and digital signature are one and the same. E-Signature is any signature that is in electronic form as opposed to paper-based ink signatures.

Examples of electronic signatures are scanned image/JPG image of the person's ink signature, a mouse squiggle on a screen or a hand-signature created on a tablet using one's finger or stylus, a biometric hand-signature signed on a specialist signing hardware device etc.

Most commonly used method (mistake!!!) of signature is facsimile signature which is a simple reproduction of one's manual signature saved electronically or by engraving, imprinting or stamping.

Suggestion -

A stringent instruction in continuation to the instruction of July 6, 2015 should be issued mandating the trade to put only valid digital signature (if they really want to move ahead towards Digital India) to avoid unpleasant moments as Section 77 (1) e & (2) of the Finance Act, 1994 bestows powers on Dept to impose penalty upto Rs 10,000 for non-issuance of Invoice in accordance with the provisions or any contraventions contained in the Act and Rules. Similar penalty also awaits under rule 27 of the CER, 2002.

And at the same time credit availed on defective documents is also a financial burden on receiver.

(The author is General Manager-Indirect Taxation, Sanghi Industries Ltd.)