Can somebody help me how to check for banding and what is the purpose of it and is it checked inside of the tank ( horizontal weld) or its better to check outside shell plate ( horizontal seam)?
Take a look at API 650. You are trying to measure deviation away from plumb of a horizontal joint with a straight edge oriented vertically. If it is deviated outward, check from the inside, else check from the inside.
I imagine the purpose behind this is to determine if there is local bending due to out of roundness which would increase stress and potentially reduce fatigue life.
Its utilized in the fabrication to control out of line plates via periodic sweep / band checks.
If you're doing this in service you're better off contacting a survey crew to give you a shell readout where you can see the out of round.
At the end of the day even if it is out by certain standard..what are you going to do about it? If its not leaking or posing serious threat I wouldn't sweat it.