The objective of a VAT audit is to close the gap between the tax declared by VAT dealer and the tax legally due. Using a risk based audit selection system, the Sales Tax Department (STD) should be able to fulfill the dual purpose of maximizing revenue collection and ensuring voluntary compliance by providing a reasonable chance that defaulters will be identified and undeclared tax, interest and penalties are collected. The VAT audit is an integral part of a VAT compliance / self-assessment system. It is important to note that, the role of VAT Audit is to undertake business investigation at dealer’s place of business with prior intimation to the VAT dealer. The VAT auditor is not expected to exercise powers relating to enforcement viz, search or seizure. However wherever necessary, VAT auditor has to seek help of Investigation team so that the potential evidence is not destroyed. The aim of VAT audit is to encourage the highest possible level of voluntary compliance using a system of self-assessment. The VAT dealer calculates his own liability and makes his payment of the tax declared as due while the STD reviews the self-assessment subsequently by means of a VAT audit.