Vat Audit under GVAT Act

If either of sale or purchase is Rs. 500001 or more AND taxable sales of Rs. 10001 or more during the year, then such a person is considered as a "dealer" under G VAT and falls in the jurisdiction of G VAT. 

About VAT audit, if the turnover of sale or purchase is more than 1 crore, then VAT audit is required to be done.

Here, in your case, the purchases cross the threshold limit, i.e. 25 lakhs+78lakhs = 103 lakhs~1.03 crore. To be noted, machinery is "Capital Good" and is included in goods.

So, the assessee is liable to  G VAT audit.

Hope, i've helped you a bit.

Njoy. ;)