In exercise of the powers conferred by sub-rule (2) of Rule 17A of the Maharashtra Value Added Tax Rules, 2005 (hereinafter referred to as "Principal Rules" the Commissioner of Sales Tax, Maharashtra State hereby notifies that,- For the Form-704 appended to the principal Rules the following Form shall be substituted, namely:-

"FORM 704

(See rule 65 and sub-rule (1) and (2) of Rule 17A)

The Audit Report under the Maharashtra Value Added Tax Act, 2002.

INSTRUCTIONS

(Please read the instructions carefully before filling the report)

1. This form is to be used in respect of all accounting periods starting on or after 1st April 2008.

2. This Audit Report is to be submitted by all the dealers to whom the provisions of Section 61 of the MVAT Act, 2002 apply. Non-filing of Audit Report within prescribed time is an offence.

3. only those documents which are required under the Audit report should be enclosed with this report.

4. This report is divided in three parts, which are as under:-

Relevant Schedules applicable, as per type of return

5. Instructions for filling information in the return(s) remain applicable for respective items of the schedules. If, while filing returns, these instructions have not been followed, it should be ensured that they are followed while preparing the audit report. In other words use schedule as is applicable.

6. Fill the applicable portion of Part 1A, Part 1B and Part 1C. If Part 1A is filled then Part 1B and 1C should not be opted. In case Part 1B is opted then Part 1A and Part 1C should not be opted. In case Part 1C is opted then Part 1A and Part 1B should not be opted. If this instruction is not followed then the error message appears as "Please Check and Enter Box Nos. 1(A), 1(B), 1(C)".

7. Negative certification, if any is to be incorporated with reasons, at Sr. No. a to p. in Para-3 of Part-1 and should correspond to the relevant certificate. Further, the auditor's remarks are to be included at Para 5 of Part-1 and qualifications having the impact on the tax liability in brief. Wherever applicable.

8. Tax liability under the MVAT Act, 2002 and CST Act, 1956 should be computed respectively, in Table 2 and Table 3 of Part 1.

9. The Table 4 of Part-1 is for showing amount of Cumulative Quantum of Benefits (CQB) availed. This amount includes amount of CQB on account of refund claimed under rule 79(2) and under the Luxury Tax Act as per Box 10E, 11E and 12E of Schedule IV, respectively.

10. Where dealer is required to maintain the records about the sales, purchases, Imports and Exports under Central Excise Act, 194, the Customs Act, 1962 or under the State Excise Act, 1949 in such cases the Auditor should invariably correlate the details of sales, purchases, Imports and Exports disclosed under the said Acts and disclosed under MVAT Act, 2002 Any material difference noticed should be reported at Para 5 of Part-1 accordingly.

11. The Activity Codes are generally used to classify the commodities on the lines of the economic activities. It is published by International Standard Industries Classification. The same activity codes are adopted by the National Industrial Classification. These Activity codes are to be used to fill up the information in Part-2 of Table-3. These Activity Codes are available at the Departments Wet-site i.e. Www.mahavat.gov.in

12. The difference between amount as per returns and amount as per Audit gets calculated in respective Schedules which are filled by the dealer.

13. In Annexure-A details of amount of tax paid as per returns / chalan under MVAT Act and interest paid u/s 30(2) are to be filled. The details of Refund Adjustment Order issued and amount adjusted against the tax payable for the period under Audit are also to be filled in this annexure.

14. In Annexure-B details of amount of tax paid as per returns / chalan and interest paid under Section 9(2A) of CST Act are to be filled. The details of Refund Adjustment Order issued and amount adjusted against the tax payable for the period under Audit are also to be filled in this annexure.

15. In Annexure-C details of TDS certificate received by the dealer are to be filled.

16. In Annexure-D details of TDS certificate issued by the dealer are to be filled.

17. In Annexure-E details of purchases on which the set-off is claimed by the dealer are to be filled. The details regarding set-off on capital assets, non-admissibility of set-off under Rule 54, reduction of set-off under Rule 53 etc. are to be filled in this annexure.

18. In Annexure-F Various financial ratios for the period under audit and other information are to be filled. If a dealer has multi state activities, then the ratios related to gross and net profit may be given for entire business of entity and other ratios should be given for the state activities.

19. In Annexure-G details about Declarations or certificates received under the CST Act, 1956 is to be filled. TIN of the Customer should be filled in applicable cases.

20. In Annexure-H details about wanting certificate in Form-H in respect of local sales to be filled. TIN of the Customer should be filled in applicable cases.

21. In Annexure-I details about wanting declarations under the C.S.T. Act, 1956 is to be filled. TIN of the Customer should be filled in applicable cases.

22. The tax liability as per Annexure-H and Annexure-I, if any, gets reflected in figure as per Audit in row (xiv) of table No.2 and row (xi) of table No.3 of para 4 of part 1.

23. In Annexure-J dealer-wise information of sales and purchases for the period under Audit is to be filed, It consist of Six Sections.

a) Section 1 is for filling the information of Customer wise sales.

b) Section 2 is for filling the information of Supplier wise purchases.

c) Section 3 is for filling the information of Customer wise Debit Notes and Credit Notes.

d) Section 4 is for filling the information of Supplier wise Debit Notes and Credit Notes.

e) In Section 3 and Section 4 figures with minus sign should be used in case of Credit notes and Debit Notes.

f) Section 5 is for filling the information of Customer wise transactions of direct exports and High seas sales under the CST Act, 1956

g) Section 6 is for filling the information about the purchases effected from outside the Maharashtra State (OMS). The information is so filled should be dealer wise and transaction type i.e. against Form-C, agaisnt E-I or E-II.

24. In Annexure-K determination of Gross Turnover of Sales and Purchases along with reconciliation with Profit and Loss Account, Trial Balance/ Sales and Purchase register.

25. A sheet is provided in the beginning by the name "Letter of Submission". It is provided for dealer's statement regarding submission of the Form- 704 and acceptance of Auditor's recommendations. It is to be submitted to the concerned authority along with the Acknowledgment of Audit Report in Form-704.

26. In case of Annexures, after pressing the button for validation only one error appears at a time. After correcting the same next error will appear. Errors in Annexure can be avoided if the rows in which information is to be filled are filled correctly and completely.

27. If the dealer has multi-state activities then Trial Balance in relation to the business Activities in Maharashtra should be attached.

28. Wherever prescribed documents are not made available to the auditor or same are insufficient and incomplete then the tax liability is to be computed as per the provisions of law.

29. An Acknowledgment will be generated in case of successful uploading of this Audit Report. It will show the Transaction Id and Date of uploading along with some other fields. The dealer is required to submit a print out of this Acknowledgment to the Deputy Commissioner, Desk Audit Cell, 5^th Floor, New Building, Vikrikar Bhavan, Mazgaon in case of Mumbai and in case of Places other than Mumbai to the Office of the Joint Commissioner of Sales Tax, VAT (ADM).

30. Unless the dealer submits signed Acknowledgment along with required attachments, on or before 10 February 2011, the audit Report even if electronically uploaded on or before 31 January 2011, shall not be deemed to have been filed.

31. The Auditor should certify the annexures. Further, the Auditor should also give reasons for additional tax liability. If any, the dealer may accept the Auditors finding and discharge the liability if any, worked out by the Auditor either fully or partly.

32. It is mandatory for the Auditor to visit the principal place of business and the place where major business activities are carried out before the date of furnishing of Audit Report to the dealer.

33. It is mandatory to fill Part I, Part II and the applicable Schedule and Annexures. An option is available at the top right hand corner of each Schedule to choose whether the particular Schedule is applicable or not. The option is named as "Applicable" and allows option to select "Yes or No". It is mandatory for the dealer to select "Yes" in case the particular Schedule is applicable and "NO" if the same is not applicable. Once a dealer selects the option "No" then he shall not enter any information in the Schedules for which the option selected is "No".

34. The Annexure which are not applicable should be left blank.

35. It is mandatory to fill all the cells of Part-1 and Part-2 and Annexure- F. In case any filled or box is not applicable. 'O' (zero) in numerical fields and 'N.A.' in text fields should be entered.

36. In all the Schedules and Annexure it is mandatory to fill applicable rows completely i.e. if one cell in a row is filled then it is mandatory to fill all the remaining cells in that row.

37. Wherever the words "Please Specify" appears it is necessary to specify the description. For example, in Part-1, Cells C84, C86 of Table 2: C106 of Table 3 and B131, B132 of Table 5, it is necessary to mention the description, if figures are filled in the corresponding cells.

38. The green and shaded fields are non enterable. The green fields have been given formulas and are auto filled.

39. If Wrong TIN is entered in the form, then it remains RED & BOLD.

40. Most of the fields of Part-1 are auto filled, once the Annexures and the Schedule are filled. Hence it is advised to fill form 704 in the order.

First Annexure A to K then, Schedules I to VI then Part II and lastly Part-1.

41. After validating any sheet i.e. after the validation button is pressed, the error sheet shows only the errors in that particular sheet. After pressing the validation button in Part-1, Errors in the entire form are shown. After successfully validating the Part-1. Rem. txt file will be generated and get saved on Drive 'C'. The dealer may upload this file after logging on to www.mahavat.gov.in under his login Id and Password for e-Services.".

FORM .. 704

(See rule 65)

Audit report under section 61 of the Maharashtra Value Added Tax Act, 2002.

PART .. 1

AUDIT REPORT AND CERTIFICATION

1. The audit of M/s.................................... holder of Tax Payer Identification Number ........................ under the Maharashtra Value Added Tax Act, 2002 (hereinafter referred to as "the MVAT Act" and Tax Payer Identification Number........................ under the Central Sales Tax Act, 1956 (hereinafter referred to as "the CST Act" ) is conducted by (*) me/us (Chartered accountants/cost accountant) in pursuance of the section 61 of the MVAT Act .

1(A) (*) The Tax Audit under the provisions of the Income Tax Act, 1961 was conducted by (*) me/us/ M/s __________________________________________________________________

____________________________Chartered Accountants. We hereby annex a copy of our/their Tax Audit Report dated ____________ alongwith all the annexures to those reports and copies each of: -

(a) the audited (*) Profit And Loss Account / Income And Expenditure Account for the year ended on ____________________________;

(b) The audited balance sheet as at ___________________;

OR

1B. (*) The Tax Audit of the dealer under the provisions of the Income Tax Act, 1961 has not been conducted but the Statutory audit is conducted under ___________ Act. Therefore, we have obtained the Audit Report, Balance Sheet as at __________________ and the Profit and Loss Account/Income and Expenditure A/c for the financial year ended on ____________ and the same are annexed herewith.

OR

1C. (*) The dealers books of account are not audited under any statute.

Therefore, we have obtained the Balance Sheet as at __________________ and the Profit and Loss Account/Income and Expenditure A/c for the financial year ended on ____________ duly certified by the dealer and the same are annexed herewith.

Maintenance of books of accounts, sales tax related records and preparation of financial statements are the responsibilities of the entity's management. Our responsibility is to express an opinion on their sales tax related records based on our audit. We have conducted our audit in accordance with the standard auditing principles generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the sales tax related records and financial statements are free from material mis-statement(s). The audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates by management as well as evaluating the overall

financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

2(A). I/we have verified correctness of the tax liability of the dealer in respect of below mentioned sales tax returns.

TABLE-1

2(B) Subject to *my/our remarks about non-compliance, shortcomings and deficiencies in the returns filed and tax liability computed and presented in respective schedules and Para-4 of this Part, I/We certify that,-

(a) I/We have obtained all the information and explanations, which to the best of *my/our knowledge and belief, were necessary for the purposes of the audit.

(b) *I/We have read and followed the instructions for preparation of this audit report. Considering the nature of business of the dealer and the Form in which the dealer is expected to file return(s), we give the information as required in Part-3 in Schedule I / II / III / IV / V / VI (score out whichever is not applicable) along with the applicable annexure(s).

(c) The books of account and other sales tax related records and registers maintained by the dealer alongwith sales and purchase

invoices as also Cash Memos and other necessary documents are sufficient for computation the tax liability under the MVAT Act and the CST Act.

(d) The gross turnover of sales and purchases, determined by us, includes all the transactions of sales and purchases concluded

during the period under audit.

(e) The adjustment to turnover of sales and or purchases is based on entries made in the books of account during the period under

Audit and same are supported by necessary documents.

(f) The deductions claimed from the gross turnover of sales and other adjustments thereto including deduction on account of goods return, adjustments on account of discounts as also debit/credit notes issued or received on account of other reasons, are

supported by necessary documents and are in conformity with the provisions of the relevant Act.

(g) Considering the schedule and entry wise classification of goods sold, classification of exempted sales, sales at reduced rates are correct. The tax leviable on sales is properly computed by applying applicable rate of tax and/or composition tax.

(h) Computation of set-off admissible in respect of purchases made during the period under Audit and adjustments thereto are

correct. While ascertaining the correctness, *I/We have taken into account the factors such as goods returned, adjustments on

account of discounts as also debit /credit notes issued or received on account of other reasons and these claims and adjustments are supported by necessary documents. The Set-off is worked out only on the basis of tax invoices in respect of the purchases.

(i) Wherever the dealer has claimed sales against the declarations or certificates; except as given in Annexure-H and Annexure-I, all such declarations and certificates are produced before me. I/we have verified the same and they are in conformity of the provisions related thereto.

(j) Computation of Cumulative Quantum of Benefits (CQB), wherever applicable, is in conformity with the provisions of the Act in this regard.

(k) The records related to the receipts and dispatches of goods are correct and properly maintained.

(l) The tax invoices in respect of sales are in conformity with the provisions of law.

(m) The Bank statements have been examined by *me/us and they are fully reflected in the books of account.

(n) *I/we certify that *I/we have visited the principal place of business or a place of business from where major business activity is conducted by the dealer. The dealer is conducting his business from the place/places of business declared by him as his principal place of business/and the additional place of business.

(o) Due professional care has been exercised while auditing the business and based on my observations of the business processes

and practices, stock of inventory and books of account maintained by the dealer, I fairly conclude that,-

(i) dealer is dealing in the commodities mentioned in the Part-2 of this report;

(ii) sales tax related records of the dealer reflects true and fair view of the volume and size of the business for period under

audit.

(p) I have verified that the purchases effected by the dealer in respect SEZ Unit of the dealer are used in the said Unit.

3. Out of the aforesaid certificates; the following certificates are negative for the reasons given hereunder:-

(a) _________________________________________________________________________________

(b)__________________________________________________________________________________

(c) __________________________________________________________________________________

(d)__________________________________________________________________________________

(e)__________________________________________________________________________________

COMPUTATION OF TAX LIABILITY AND RECOMMENDATIONS

4. Computation of tax liability as per Audit:-

A summary of the additional or reduced tax liability payable by the dealer and/or additional or reduced refund due to the dealer, arising on verification of sales tax returns together with books of account and other related records mentioned herein above, for the period under audit is as follows:

TABLE-2

UNDER MAHARASHTRA VALUE ADDED TAX ACT, 2002

TABLE-3

UNDER CENTRAL SALES TAX ACT, 1956

TABLE-4

CUMULATIVE QUANTUM OF BENEFITS AVAILED

TABLE-5

Classification of additional dues with calculation of Tax and interest thereon

5. Qualifications or remarks having impact on the tax liability:-

(a) _________________________________________________________________

_________________________________________________________________

(b) _________________________________________________________________

_________________________________________________________________

(c) _________________________________________________________________

_________________________________________________________________

(d) _________________________________________________________________

_________________________________________________________________

(e) _________________________________________________________________

_________________________________________________________________

6. Dealer has been recommended to:-

TABLE-6

Encl:-

FORM .. 704

(See rule 65)

Audit report under section 61 of the Maharashtra Value Added

Tax Act, 2002.

PART - 2

GENERAL INFORMATION ABOUT THE DEALERS BUSINESS ACTIVITIES

B. RELATED INFORMATION UNDER OTHER ACTS

AUDIT REPORT

PART-3

SCHEDULE-I

AUDIT REPORT

PART-3

SCHEDULE-II

  AUDIT REPORT

PART-3

SCHEDULE-III

  AUDIT REPORT

PART-3

SCHEDULE-IV