TaxTMI 
TaxTMI 
Central Excise and Service Tax Audit norms to be followed by the Audit Commissionerates–reg.
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....ness of the taxes self-assessed and reported in the tax returns besides complying with other legal obligations. 2. In the past, norms / guidelines were issued by the Board for conduct of audit by the Commissionerates. The existing norms / guidelines for selection of units for audit are based on a single criterion, namely, the threshold limit of taxes paid in the previous Financial Year. Taxpayers are categorizedinto mandatory and non-mandatory units based on taxes paid and the units are required to be audited as per the frequency norms stipulated for each category. The criteria adopted do not take into account the risk factors and the resources available for undertaking audit. The uniform norms and frequency prescribed for conducting audits across the Commissionerates also do not factor in crucial inputs such as the assessee base, availabilityof manpower and the risk indicators for selection of units for conducting audit. The audit coverage in Service Tax has been below the satisfactory levels on account of huge taxpayer base and limited availability of manpower in major cities such as Mumbai, Delhi, Bengaluru, etc. 3.&nbs....
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.... assessees / taxpayers. b) 1 - 2 Superintendent and 2 - 3 Inspectors for conduct of audit of Medium assessees / taxpayers. c) 1 Superintendent and 1 - 2 Inspectors for Small assessees / taxpayers. Assistant / Deputy Commissioners may lead the Audit Groups in select cases. 5.3 The indicative duration for conduct of audit that is inclusive of desk review, preparation and approval of Audit plan, actual Audit and preparation of Audit report wherever necessary, for each category would be as under: a) Large assessees / taxpayers - 6 to 8 working days b) Medium assessees / taxpayers - 4 to 6 working days. c) Small assessees / taxpayers - 2 to 4 working days 5.4 Given that there are around 249 working days in a year, the number of Audits that can be approximately conducted in a year are as follows: a) 31 Large units (calculated at 8 days per unit) by one Audit party b) 42 Medium units (calculated at 6 days per unit) by one Audit party and c) &nbs....
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....ionerate and (ii) the Assessee base, turnover and duty paid by each Assessee in the jurisdiction of the Audit Commissionerate. It may be noted that threshold limits may vary from one Audit Commissionerate to another Audit Commissionerate in view of varying number of Assessees and quantum of value of clearances / services and duty paid in case of each Assessee. The Audit Commissionerateswould obtainthe requisite data from EDW / ACES / EASIEST for categorization of Assessees into large / medium / small within their Commissionerate. The categorization would be done based on the methodology prescribed by the Directorate General of Audit.The methodology for categorization would be communicated to the Audit Commissionerates by Directorate General of Audit during the month of March / Aprilevery year. 5.8 The Audit Commissionerates shall consult zonal units of Directorate General of Audit while finalizing the Annual plan ofAudit coverage with the available manpower at the beginning of the financial year. The scheduling can be reviewed half yearly for necessary adjustments, if any.The Directorate General of Audit will also periodically review and revise, wherever necess....
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....efficacy of the above parameters as well as frequency of audits in consultation with Audit Commissionerates. Theme based coordinated Audits 7.0 Theme based coordinated Audits at all India level would be conducted by concerned Audit Commissionerates in a synchronized manner. The theme would be selected by the Directorate General of Audit based on systematic and methodical risk analysis of internal taxpayer data (from ACES and EDW), economic indicators, third party information from tax and other regulatory authorities and other relevant sources of data. Directorate General of Audit would also consult trade, industry and service providers from time to time, wherever necessary. The theme would be intimated well in advance, say four to six months, to the field formations. Detailed questionnaires would be prepared as guidance to the Audit parties. The dates for such Audits would be fixed in advance, say sometime in December every year, so that they can be blocked by the Commissionerates. The number of such Audits will be one or at best two in a year. The selection of theme / issue, coordination and dissemination would be done by DG(Audit) in consultation with the ....