Understanding the Scope and Purpose of the Audit

• Legacy audits are conducted to verify compliance during the service tax regime (pre-GST).
  
• The audit may cover periods up to June 30, 2017, or earlier based on pending assessments.
  
• The scope includes verification of tax payment, return filing, CENVAT credit, and classifications.
  
• Departments may initiate audits for unresolved matters, litigation, or past discrepancies.
  
• Clarify the audit period, type (regular or special), and officer’s jurisdiction before preparation.
  

Organizing Mandatory Documents and Records

• Retrieve ST-1 registration, ST-2 certificate, and all ST-3 returns filed for relevant years.
  
• Gather GAR-7 challans or online CIN payment receipts with reconciliation sheets.
  
• Compile service invoices, bills, ledgers, and client-wise tax records.
  
• Maintain CENVAT credit registers, input service invoices, and utilization statements.
  
• Include agreements, contracts, work orders, and other supporting documentation.
  

Reconciling Financial Data with Returns

• Match tax liability declared in ST-3 returns with books of accounts and trial balances.
  
• Reconcile revenue from services with general ledger and profit & loss statements.
  
• Align CENVAT credit availed with input services reflected in books.
  
• Prepare explanation for any mismatch in output services or credit adjustment.
  
• Create a summary sheet showing month-wise turnover and service tax paid.
  

Internal Review and Compliance Health Check

• Identify past departmental communications, show cause notices, or audit objections.
  
• Rectify errors, omissions, or unreported transactions proactively if permissible.
  
• Check whether exemptions, abatements, or valuation rules were correctly applied.
  
• Review pending refund claims, reversals of credit, and closing balances as on 30.06.2017.
  
• Prepare a clean and accurate audit file for ready reference and submission.
  

Interaction with the Department and Representation

• Assign a tax practitioner or internal team member to liaise with audit officers.
  
• Submit documents formally with a cover letter and annexure reference list.
  
• Ensure all submissions are acknowledged in writing for record-keeping.
  
• Maintain professional conduct and seek clarification where needed.
  
• Document audit observations, and if any, prepare timely reply or appeal with legal support.