VAT Audit – Maharashtra instructions
With regard to Audit, the Commissioner, Sales Tax, Maharashtra gives the following clarifications:-
Procedure of Audit:
As per the present procedure, the audit is carried out at the place of the dealer by the officers working in the Business Audit Divisions. The cases for audit are selected by the Business Audit Criteria Committee on the basis of certain criteria. Normally, the audit is carried out with prior information of the date to the dealer, unless there is deliberate decision to conduct surprise audit. The notice of information to the dealer shall also contain what information he should keep ready at the time of visit. The officer is authorised by the Joint Commissioner of Sales Tax of the respective Business Audit Division for this purpose. If however the officer is unable to keep the appointment then he will inform the dealer well in advance. If the information sought for in the notice sent to the dealer is not kept ready by the dealer at the time of the visit, the auditor may levy penalty in suitable cases.
Scope of Audit:
As the primary object of Business Audit is to ensure the compliance of laws implemented by the Department, the audit officer will ascertain the correctness of returns filed by the dealer, both under MVAT Act and CST Act. Obviously, the audit officer will verify the books of accounts maintained by the dealer along with sale bills, purchase bills, sales journals, purchase journals, ledger, cash book, delivery challans , dispatch proofs, bank statements and every other document or piece of evidence to ascertain the correctness of turnover returned and also the correctness of claims made through returns. The audit officer may also ask for agreements, purchase orders, work orders, tender documents etc., if such documents are required for ascertaining the correctness of returns. The audit officer is also authorised to ask for the details of filing of returns and payments, if required.
Powers of the Audit Officer:
If any discrepancy is noticed in the process of audit, either in returns or books of accounts or otherwise, then the audit officer has to communicate his observations to the dealer, if possible on the date of audit itself or immediately thereafter. The communication to dealer is expected to be unambiguous and clear in its import. If the audit observations / objections are acceptable to the dealer then after compliance by the dealer the process of audit would stand concluded. The corrective action could be filing of revised returns and making payment of differential dues, if any, including interest.
In the event of audit observations / objections not being acceptable to the dealer, the audit officer would initiate appropriate proceedings including assessment.
Duties of Dealer:
As expressly mentioned in Section 22 read with section 2 (18), 63 (4), 64, the dealer under audit has to afford necessary facility to auditor to inspect books of accounts. The dealer shall give unhindered access to his books of accounts and / or to computerized books of accounts. The audit process can be hastened only if the dealer keeps his books of accounts, bills and all relevant documents at the place of business. The queries raised by audit officer are expected to be clarified with requisite evidence or documents then and there only so that the issues are immediately resolved and the resolution of issues is not kept pending. Legal issues having financial implications, of course, could be resolved on a later date. The dealer shall also furnish the E-mail addresses and contact numbers of his vendors/ vendees.
Rights of the Dealer:
The dealer under audit has a right to ask for valid authorisation of audit officer for carrying out audit. He can also ask for Identity proof of audit-team. The dealer can continue his business during audit. He can also take help of sales tax consultant / practitioner, if so required by him. It is the discretion of the dealer either to accept or reject the audit observations communicated to him by the audit officer. The dealer under audit will have a right to know the result of audit within a reasonable period of time. Normally, audit process is expected not to continue beyond a period of three months or so for reaching to final conclusions, provided the dealer extends full co-operation in the proceedings. This time limit would of course not be applicable, if the audit results in initiation of assessment proceedings.
MAHARASHTRA TRADE CIRCULAR No. 25 T of 2008 Dated 23 July, 2008