(1) The Commissioner may select such individual dealers or class of dealers for tax audit on random basis or on the basis of risk analysis or on the basis of any other objective criteria, at such intervals or in such audit cycle, as may be prescribed.

(2) After identification of individual dealers or class of dealers for tax audit under sub-section (1), the Commissioner shall direct that tax audit in respect of such individual dealers or class of dealers be conducted in accordance with the audit programme approved by him:

Provided that the Commissioner may direct tax audit in respect of any individual dealer or class of dealers on out of turn basis or for more than once in an audit cycle to prevent evasion of tax and ensure proper tax compliance.

(3) Tax audit shall ordinarily be conducted in the prescribed manner in the business premises or office or godown or warehouse or any other place, where the business is normally carried on by the dealer or stock in trade or books of account of the business are kept or lodged temporarily or otherwise.

(4) After completion of tax audit of any dealer under subsection (3), the officer authorised to conduct such audit, shall determine the tax liability of the said dealer and serve a notice along with the Audit Visit Report in the prescribed form to the dealer to pay net tax due so determined."

(5) If the dealer admits to the observations made in the Audit Visit Report referred to in sub-section (4) in writing, and pays in full the amount of net tax due under sub-section (4) and twenty five per centum of the tax so determined as penalty within thirty days of the date of service of the notice, there shall be no assessment as a result of that audit.

(6) If the dealer does not comply with sub-section (5), the officer authorised to conduct such audit shall, submit the "Audit Visit Report", to the assessing authority along with the statements recorded and documents obtained evidencing suppression of purchases or sales, or both, erroneous claims of deductions including input tax credit and evasion of tax, if any, relevant for the purpose of investigation, assessment or such other purposes.