33. Audit Assessment
(1) For the purposes of Section 37, the Prescribed Authority shall, in respect of any 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 maintained by such dealers. Such selection by the commissioner shall be made through a formula specially evolved for this purpose. The number of registered dealers to be audited every year shall ordinarily be not more than ten per centum of the total number of registered dealers in the State.
(2) After making selection of the registered dealers under sub-rule (1), a list relating to each Circle shall be sent to the in-charge of the circle. Upon receipt of such list the In-charge shall, constitute a team of such officers as may be required to conduct an audit in respect of each such dealer. Such team of audit authority may consist of one or more Commercial Taxes Officers, Assistant Commissioner of Commercial Taxes or Deputy Commissioner of Commercial Taxes, as the In-charge of the circle may deem fit.
(3) The audit authority constituted under sub rule (2) shall serve upon the dealer selected for audit, a notice in Form JVAT 304 specifying therein, the time, date, the expected duration of the audit at the place of business of the dealer and the nature of accounts and documents to be examined by the authority and the dealer shall comply with the terms of such notice.
(4) The Prescribed authorities may require the assistance of any authority or person for the cross verification of any information gathered during the course of an audit assessment.
(5) The audit report drawn by the audit team shall be scrutinized by the Circle in-charge and a final report shall be prepared a copy of which shall be handed over to the dealer.
(6) The dealer shall file his reply to the issues raised in the final report within a period, which shall not ordinarily be less than fifteen days from the date of the receipt of the report.
(7) If, having regard to the final report and the reply filed by the dealer, the prescribed authority has reasons to believe that the dealer has not disclosed his correct tax liability or has concealed or omitted any fact leading to any reduction in the tax payable by him, he shall proceed to assess to the best of his judgment, the amount of tax due from such dealer in accordance with the provisions of sub-section 5 of Section 37 of the Act.
(8) The Prescribed authorities conducting the audit, shall issue a notice in Form JVAT 304, in accordance with the provisions of sub-section (6) of Section 37, and after hearing the dealer, if the said authority is satisfied, the dealer has, in order to evade or avoid payment of tax, has failed to file a Return or has furnished an incomplete and incorrect Return or has availed Input Tax Credit for which he was not entitled or has employed any such method of accounting, which does not enable the prescribed authority to assess the tax due from him, the Prescribed Authority shall proceed on imposing a penalty, a sum equal to twice the amount of additional tax assessed on account of the aforesaid reason(s).
(9) When the additional tax assessed along with the Penalty imposed, the Assessing Authority shall issue demand notice in Form JVAT 300.