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TMI BlogCentral Excise and Service Tax Audit norms to be followed by the Audit Commissionerates–reg.X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. In the background of creation of exclusive Commissionerates to deal with audit and having regard to the difficulties faced, and also the experience gained with regard to audi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) 62 Small units (calculated at 4 days per Audit) by one Audit party 5.5 The aforementioned number of Audits could be then multiplied by the number of Audit teams prepared for each category to arrive at the total number of Audits that can be conducted by each Commissionerate during the year. 5.6 The manner of deployment of officers as mentioned above and calculation of number of units that can be audited during the year are illustrated below: * Suppose the working strength of an Audit Commissionerate is 60 Superintendents and 80 Inspectors.The deployment of officers would be: 24 Superintendents and 32 Inspectors f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nerates 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 necessary, the criteria for categorizing the units into large, medium and small within each Zone / Commisionerate, manpower deployment in each category, composition of audit team and number of days required for audit in each category. The review / revision would be done in consultation with the Audit Commissionerates so as to ensure that Audit coverage by officers is made optimal. 5.9 The Chief Commissioner may allow temporary reallocation / diversion of officers amongst the Audit Commissionerates to ensure adequate Audit coverage of all categories of Assessees / Taxpayers falling under the jurisdiction of the zone. Selection methodology: 6.0 The selection of Assessees would be done based on the risk evaluation method prescribed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 field formations. 7.1 The theme based coordinated Auditswould also be carried out at the Zonal level. The theme for the Audit, which could be a sensitive commodity or a service, would be selected at the zonal level and simultaneous and coordinated Audit would be carried out within the zone. The number of such Audits will again be one or two in a year. The theme for the Audit would be selected based on analysis of data provided by ACES, EDW and relevant third party information identified from time to time. The Chief Commissioner may involve the zonal units of Directorate General of Audit in selection of theme, planning and execution of theme based Audit. Audit of Multi Locational Units 8. In case of multi-locational units and multi-locational Service Providers, as prescribed in the Central Excise Audit Manual and Service Tax Audit Manual respec ..... 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