(1)(a)(i) For the purposes of section 26, the Commissioner shall, in respect of any financial year, select by the 31st of March of the year following the financial year, such number of dealers as may be deemed fit, for audit, to be conducted either singly or by a team of officers for ascertaining the correctness of accounts and records maintained by such dealers. The number of registered dealers to be audited ev ery year shall ordinarily be not more than ten per centum of the total number of registered dealers in the State.

(ii) A list of all such dealers selected for audit shall be posted on the official website of the Commercial Taxes Department within fifteen days of such selection.

(b) The criteria adopted by the Commissioner for selection of dealers for audit shall be published in a notification issued by the Commissioner in this behalf and the said criteria shall also be posted on the official website of the Commercial Taxes Department, within fifteen days of selection of dealers for audit.

(c)(i) A dealer objecting to his selection for audit under clause (a) shall file such objection before the Commissioner, or the officer specially authorized by the Commissioner in this behalf, by the end of the month of May immediately following the month of selection. The dealer shall clearly state the grounds on which the objection is being filed.

(ii) The Commissioner, or the officer specially authorized by the Commissioner in this behalf, shall, after considering the grounds and after giving the dealer an opportunity of being heard, pass such orders in the matter as he may deem fit, within one month of the filing of the objection.

(iii) If, pursuant to an order under sub-clause (ii), a modification to the list posted on the official website of the Commercial Taxes Department under sub-clause (ii) of clause (a) of sub-rule (1) becomes necessary, the modified list shall be posted on the official website of the Commercial Taxes Department within fifteen days of the order being passed under sub-clause (ii).

(2) After posting the final list under sub-rule (1), a list relating to each circle shall be sent to the concerned Circle Incharge and copies of the same shall also be forwarded to the Joint Commissioner Incharge of Administration of the Division and the Joint Commissioner Incharge of Audit.

(3) A list of dealers selected for audit in respect of a division shall be displayed for public viewing on the notice board of the concerned Joint Commissioner, Incharge of the Audit and also on the notice board of the circle in which the concerned dealer is registered.

(4) The concerned circle Incharge shall send copies of the return of the dealers selected for audit, along with copies of the utilization statements of statutory declarations by such dealers, to the concerned Joint Commissioner Incharge of Audit at the earliest, preferably within two months of the posting of the modified list under sub-clause (iii) of clause (c) of sub-rule (1).

(5) The concerned Joint Commissioner, Incharge of the Audit shall constitute audit teams from amongst the officers posted under him or from amongst the officers posted in any circle of the division to conduct the audit of the dealers selected for Audit.

(6)(a) The head of the Audit team, who shall be the senior most member of the team constituted under sub-rule (5) shall serve upon the dealer selected for audit, a notice in Form N-IV before the end of the month of March immediately following the month during which the dealer was selected for audit.

(b) The notice under clause (a) shall specify the time, the date, which shall in no case be less than thirty clear days from the date of the service of the notice, the expected duration of the audit and the nature of accounts and documents likely to be examined by the audit team and the dealer shall comply with the terms of notice:

Provided that a dealer selected for audit may, on account of circumstances beyond the dealer's control, make a prayer, before the Joint Commissioner Incharge of Audit, for adjournment of the date specified in the notice and the Joint Commissioner Incharge of Audit may extend, by a period not exceeding three months, the date of audit if the said authority, for reasons to be recorded in writing, deems it fit to extend the said date.

(c) The audit shall be conducted at such place as the Commissioner may, by order, specify.

(d) The audit authority may require the assistance of any authority or person for the cross verification of any information gathered during the course of an audit.

(e) After conducting the audit, the audit team shall draw up a draft report of such audit and submit the same to the Joint Commissioner, Incharge of the Audit.

(7) The draft report drawn by the audit team shall be scrutinized by the Joint Commissioner, Incharge of the Audit who shall review the draft report and a final audit report shall be prepared in consultation with the audit team that had conducted the audit within two months of the preparation of the draft report, a copy of which shall be served upon the dealer.

(8)(a) A copy of the final audit report, drawn up by the audit team in terms of the provisions of sub-rule (7), shall be forwarded by the Joint Commissioner, Incharge of the Audit to the concerned Circle Incharge within two months of the preparation of the final audit report.

(b) The concerned Circle Incharge shall allot the file to any officer posted under him.

(c) If, after considering the final report, the officer to whom the file has been allotted is of the opinion that the dealer had not disclosed his correct tax liability or had concealed or omitted any fact or, as the case may be, presented any fact in such a manner, that has led to any reduction in the tax payable by the dealer, he shall proceed to initiate proceedings under section 31of the Act:

Provided no re-assessment under Section 31 shall be made unless the dealer is served with a notice in From N-V.

(9)(a) In case a dealer upon whom a notice in form N-IV has been served, fails to appear before the audit authority by the date specified date under clause (b) of sub-rule (6), or the date extended under the proviso thereto, the audit authority shall afford, by notice, an opportunity to the dealer to appear within a period not exceeding one month from the specified date:

Provided that if the dealer appears before the audit authority on the specified date and seeks an adjournment, the audit authority may grant such adjournment as may appear reasonable to him in view of the ground or grounds on which such adjournment has been sought.

(b) If a dealer upon whom a notice has been served under clause (a), fails to appear before the audit authority by the date specified in the said notice, the audit authority shall conduct the audit of the dealer in accordance with the provisions of sub-rule (6).

(c) Notwithstanding, anything contained in sub-rule (6), the audit of a dealer who does not appear for audit before the audit authority by the date specified in the notice issued under clause (a), the audit shall be conducted at the place of his business without issuance of any further notice in this behalf.

(10) All proceedings in respect of audit of a dealer pending for disposal as on the date of coming into force of these amendments shall be disposed of in accordance with the procedure laid down in sub-rule (7) and sub-rule (8).