7.        Audit and Inspections

Inspection: Directorate General of Service Tax (DGST) conducts inspections of Service Tax work in Central Excise Commissionerates & Service tax Commissionerates all over the country. Inspections in the past have prompted the Commissionerates to streamline the service tax administration system.

In pursuance of the Board’s letter No.137/311/2007-CX.3 dated 15.12.2007, the DGST is conducting the inspection of the Commissionerates having service tax revenue of Rs.500 Crore and above per annum. Accordingly, 8 Commissionerates each were inspected by the DGST during 2008-09, 2009-10 and 2010-11.

Audit:   The service tax is envisaged to be administered on self-assessment basis. Legal provisions for facilitating such self-assessment have been made in the Finance Act, 2001. This underlines the need for strengthening the audit mechanism to prevent tax evasion/avoidance. The Director General of Audit, Central Board of Excise & Customs New Delhi published ‘SERVICE TAX AUDIT MANUAL 2003’ on 01.10.2003 containing the entire procedure to be followed by the officers of the Department while conducting audit of the Service Tax providers. All Commissionerates have also been directed to conduct the internal audit of assessees’ records as per the instructions of the Board.      

This audit drive has resulted in the augmentation of revenue. During 2009-10 total 12989 audits were conducted in India by 549 audit groups. These audits, resulted in detection of short payment to the tune of Rs. 7873.84 Crores and a recovery of Rs.1083.43 Crores. It is necessary that all available resources and efforts are mobilized by the field formations for audit of the registered assesses as per the norms decided by the Board.

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