27. Audit of the dealer

(1) With a view to promoting compliance with the provisions of this Act, the Commissioner may arrange for audit of the business of such of the registered dealers who are selected by the Commissioner on the basis of the application of any criterion or on a random selection basis or in respect of whom the Commissioner has reasons to believe that detail scrutiny of their business is necessary.

(2) The audit of the dealer shall be conducted by the auditor in the prescribed manner.

(3) The auditor while conducting audit shall exercise the powers provided under section 75 and shall examine the books of accounts, stock in trade and the related documents of the dealer of the audit period.

(4) If on such audit, the returns filed by the dealer are not found to be correct, or any avoidance or evasion of tax is detected the auditor shall, issue a show cause notice to the dealer containing details of discrepancies detected.

(5) On receipt of the reply to notice issued under sub–section (4), the auditor shall after considering the reply of the dealer assess his tax and other related liabilities and get such order approved from his immediate higher officer before its issuance to the dealer along with the demand notice. Where the dealer fails to submit the reply, the auditor shall proceed to assess the liability of the dealer under this Act, to the best of his judgment.

Such assessment shall be deemed to be the assessment of the dealer for the relevant period and assessment, if any, already made shall be subject to the assessment made under this section.