The Classic Partners LLP

Audit Under the Sales Tax Act

Statutory audit and compliance support for dealers and businesses liable under the applicable Sales Tax / VAT legislation. We help businesses maintain accurate records, file timely returns, and stay fully compliant with the Sales Tax Department and related indirect-tax authorities.

Talk to a Sales Tax Audit Expert

What is a Sales Tax Audit?

A Sales Tax audit (also referred to as a VAT audit in states that transitioned to Value Added Tax) is the independent examination of a registered dealer's books of account, purchase and sales records, tax returns, and related documents by a Chartered Accountant. Dealers whose turnover exceeds the threshold prescribed under the applicable State Sales Tax or VAT Act are required to get their accounts audited and submit the prescribed audit report to the Sales Tax Department within the specified due date.

Even in the GST era, outstanding Sales Tax / VAT liabilities, pending assessments, and legacy compliance for periods prior to the GST migration remain live obligations for many businesses. Our team handles both the statutory Sales Tax audit and the related reconciliation and assessment support under one roof.

Who Needs an Audit Under the Sales Tax Act?

Registered dealers whose annual turnover exceeds the threshold prescribed under the relevant State Sales Tax or VAT Act.
Manufacturers, traders, and service providers with taxable sales under the applicable legislation.
Businesses with pending Sales Tax / VAT assessments or notices from the Department.
Companies with legacy VAT liability or input-tax-credit disputes requiring reconciliation.
Dealers involved in inter-state sales subject to Central Sales Tax (CST) obligations.
Businesses under voluntary audit or internal review of historical Sales Tax compliance.

Our Sales Tax Audit Services

Statutory Sales Tax Audit

Examination of accounts and preparation of the audit report and annexures required by the Sales Tax / VAT Department.

VAT Audit & Reconciliation

Reconciliation of turnover, tax liability, and input tax credit as per books versus filed returns for all VAT periods.

CST Compliance Review

Verification of inter-state sale declarations (Form C, F, H, E-I/E-II) and CST return accuracy.

Assessment & Appeal Support

Representation before the Sales Tax Officer, Appellate Authority, and Tribunal for assessments, scrutiny, and disputes.

Legacy GST Migration Review

Review of pre-GST transition credit, stock declarations, and outstanding VAT liabilities to close legacy exposure.

Advisory & Internal Controls

Guidance on record-keeping, return filing, and internal controls to minimise Sales Tax / VAT compliance risk.

Why Choose The Classic Partners

Specialised experience with Sales Tax, VAT, and CST matters across multiple states.
End-to-end compliance — statutory audit, return filing, and Department representation handled together.
Timely reporting so you never miss a Sales Tax Department or filing deadline.
Transparent fees and a dedicated point of contact for your finance and accounts team.

Frequently Asked Questions

Is a Sales Tax audit mandatory every year?

Yes, for dealers whose annual turnover exceeds the limit prescribed under the relevant State Sales Tax or VAT Act. Such dealers are required to have their accounts audited by a Chartered Accountant and submit the prescribed audit report to the Sales Tax Department within the due date.

Does a Sales Tax audit still apply after GST was introduced?

Yes. Although GST subsumed most State VAT and Sales Tax levies from July 2017, audit requirements and assessments for periods prior to the GST transition remain open. Dealers with pending VAT assessments, disputed input tax credits, or legacy Sales Tax notices must still comply with the applicable State legislation for those earlier periods.

What is the prescribed form for a Sales Tax / VAT audit report?

The prescribed form varies by state. For example, Maharashtra VAT required the audit report in Form 704, while other states have their own prescribed formats. We assess which form and annexures apply to your state and the relevant period, and prepare the report accordingly.

What documents are required for a Sales Tax audit?

Typically the VAT / Sales Tax registration certificate, books of account, purchase and sales registers, bank statements, filed returns, input tax credit records, inter-state declaration forms (C, F, H forms), and the previous year's audited financials and tax assessments.

What happens if a dealer does not get the accounts audited on time?

Non-compliance can attract penalties, best-judgment assessments by the Sales Tax Officer, and disallowance of input tax credits. Repeated non-compliance may also trigger scrutiny and department notices. Timely audit and filing protect the dealer's credit entitlement and standing with the Department.

Can The Classic Partners handle Sales Tax audits for businesses outside Mumbai?

Yes. We work with businesses across multiple states and can coordinate documentation, return reconciliation, and filings remotely, while ensuring compliance with the Sales Tax or VAT legislation applicable to your state and assessment period.

Need help with your Sales Tax Audit?

Get a clear, compliant audit handled by experienced Chartered Accountants.