M/S. Vaista Foods, Khammam District vs. The Commercial Tax Officer, Khammam - Telangana High Court, 11 February 2026

Heard together (2 matters)

W.P.No.8785 OF 2009

W.P No.13017 OF 2009

Read from the judgment's own cause title. This page is filed under one of them.

Cause title — parties, addresses and appearances

| 3447 | HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Spec3al Original Jurisdiction) WEDNESDAY, THE ELEVENTH DAY OF FEBRUARY TWO THOUSAND AND TWENTY SIX PRESENT THE HONOURABLE SRI JUSTICE P.SAM KOSHY AND THE HONOURABLE SRI JUSTICE NARSING RAO NANDIKONDA WRIT PETIT]ON NO: 8785 AND 13017 OF 2009 W.P.No.8785 OF 2009 Between: M/s. Vaista Foods, Tallampadu Village, Khammam Rural Mandal, Khammam Rural Mandal, Khammam District, Rep by its Managing Director Mr. Ch. Koteswara Rao ...PETITIONER AND The Commercial Tax Officer-|, 1st Floor, Rejeshwari Complex, By-Pass Road, Khammam. ...RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an appropriate writ, order or direction, more particularly one in the nature of Writ of Mandamus and declare the order of assessment dt- 1 1-2- 2009 issued in Form VAT 305 by the Commercial Tax Officer-|, By-pass Road, Khammam, as illegal, void and set aside the same. l.A. NO: 1 OF 2009(WPMP. NO: 11509 OF 2009 ) Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to grant stay of collection of tax and penalty pursuant to the orders dated 28-8-2008 pending disposal of the writ petition. counserrorthepetirio,",,...31:X,t?Xi.ffirji[._fiEKHAR CounselfortheRespondents:SRISWAROOPOORILLA,SCFORSTATETAX W.P No.13017 OF 2009 Between: M/s. Vaista Foods, Tallampadu Vrllage, Khammam Rural Mandal, Khammam Rural MrnOul Khammam Distnci, Rep by iis Managing Director Mr. Ch. Koteswara Rao ...PETITIONER AND The Commercial Tax Offrcer-|, 1st Floor, Reieshwarr Complex, By-Pass Road' Khammam ...RESPONDENTS Petition under Article 226 o1 the Constitution of lndia praying that in the circumstances stated rn the affidavit filed therewith, the High court may be pleased to issue an appropriate writ, order or direction more particularly in the nature of writ of l/andamus declaring the order of the respondent dated 15.05.2009 issued in Form VAT 305 imposing a penalty of Rs.'1,38,80,688/- on the petitioner as illegal. arbitrary and unreasonable and consequently set aside the same' l.A. NO: 1 OF 2009 (WPMP. NO:16849 0F 2009) Petition under section 1 51 CPC praying that in the circumstances stated in the affidavit frled in supporl of the petrtion, the High court may be pleased to interdict the respondent form recovering the penalty imposed on the petitioner by order dated 15 05 2009 tn Form VAT 305, pending drsposal of the petition' c o u n s e I ro r th e P e t i ti o n "' :.T',tX,t:'jl,[ ffi'lllfEll E K H A R Counsel for the Respondents : SRI SWAROOP OORILLA, SC FOR STATE TAX

The Court made the following: COMMON ORDER

IN THE HIGH COURT FOR THE STATE OF TEI-ANGANA AT HYDERABAD T HON'BLE SRI IUSTICE P.SAM KOSHY AND THE HON'B LE SRI IUSTI CE NARSING RAO NANDIKONDA WRIT PETITION No .8785 and 13017 of 2009 TE

20 BETWEEN: Nl/s.Vasista l'<xrds & Irats (l') I-td., -l'allarnpadu Vitlagc, lihammam Rural N[andal, I(hammam I)istrict, rcp. bi' its Managing Director, N{r. (lh. Kotcsrvara ltlo AND -l'hc (lommcrcial 'l'tx ( )[ficcr I, 1* irloor, l{ajcslr rvari (.ornplcx, llv l)rss rord, l(hammrrn. COMMON ORDER Petitroncr Responclcn t Iter r/'t Ilot'bh Sn lnttt;t P..f an Kosh;) Since rhc isstrc :rrising out oF rrvo rvrit petiuons is one and thc smnc and pilrties tllcrcto are als<-r samc' we proceed to dccidc thc rvrrt pctititlns bv rvar oI common ordcr'

I lcartl Mr. r\.V..\-Siva I(arthikcya, lcarncd cottuscl rcprcscnting l\'lr. S.\'ii'ck (.handra Sekhar, learncd counsel f<rr thc

v P agc Z ctf 12 pctitiorrcrs er-rtl Nlr. S'.i aroop C)9rilla, lcarned Spccial C)oi.ernment I)lcaclcr lrrr St:Ltc l:Lr, tor thc rcsponclcnt 3. []or convcrricrlcc, rhc facts in \{'rir l)curion No.8785 ctl 2009 are ciiscussccl lrcrcu,rclcr

Ihc. insrant \\'rir I)ctirion rs hled bv thc pctitioncr Lrnder ;\rriclc 226 ol- rhr. ( -onstirurion oI India praying the Court for issrrancc <tf t l["tt of';\ltttdamu.r ro dcclarc tlte ordcr of assessment cla tccl 11.02.2()lD, issrrcrl in Iionn \/A'l' 30-5 by rhc respondent / (.orr-rmcrcitl 'l :rr ( )l-ficcr l, ^s illecal, r.oid and to sct aside rhc same (for short, 'thc irnpugned order')

I hc pct rtiorrc r hcrcin is pnmarilv auurievcd o[ thc acti<;n o[ rh(' ( .i )llrnr( r( rl I ;rr ( )r'rlct'r ins,rhr ls nr rf rllowinp input tar crcdit and als, i.s, rlt:rr' rs .( )r r('firnding thc am()unt due to the pctiuoner. 6. ['hc I)(.trrr()n(]r hcrcin is a registcrcd dealcr uvlth thc rcsprrrdcnts tr.rlcr rhc .\nclhra Praclcsh Valuc Addcd Tax, 2005 and (lcntrli Sllr.s 'l ur \ct. 19.r6 'l hc pcdrioncr is cnsagcd rn thc busincss rif rr:rrrLrl:rctr-rrc ^.d salc.f (-ast.r ()i[ ancl irs dcrir.ati'cs.

Pagc 3 o[ 12 fhc pctirioncr's cstablishmcnt startcd Production in the year 2000' ln ordcr tc.r cnhancc tlte busincss acnvin'in thc State and in terms o[ schcmc tntroduced br, thc Statc Gclvernmcnt, the Governmcnt had brought in a G.O. govcrning the frcld holdrng the petiuoncr cntitlcd for salcs tax dcfcrmcnt for an atnount of Rs'2'43'12'190 /- to bc availcd uTthrn lJ ]'cxrs, t'e'' stardng from 30032000 tcr 29.03.2011. 'I'l.rc pctitioncr mcanrvlrile had availed rhe tax defcrrncnt for au amt>unt of Rs. l,28'83,()l 1/ and therc rvas a balance of Rs.1,20,29,179/- to bc also rccovcred and adiustcd' 'fhe pcri<il involvcd in thc prcsent rvrit pct iuon is tire Assessment Ycar 2007 2008 during rvhich rimc rhc pctitioner had undertaken certain intrl. Statc salcs rvhich includcd salcs madc to onc N{/sJ.K. Oils o[ Jcedimctla, [ lr,derablt] t() thc tunc ol Rs' 17' 1 9 crores' In addiuon' thc pcutioncr had alst> clcclarccl intcr-State salcs with u tt"rrov3r rrf Rs.8,53,15,802 l-, aod thc tax pavablc bcing Rs'24'92'583' In ad<iition, thc pctrtioncr also got esport salcs to the tunc of Rs.18,61,31,733/-, during the rclcvant pcriod, all o[ which ctubbcd t()gethcr lcd to cndtlemcnt oI the peutioncr for rcfund r>[

, I)agc 4 ol- 12 corrcsp()n(llng inpur tax crcdir u'l-rich apf r()\imatch- w()rkcd ()ut Its l.(X),6(),U7.t/- to 305'\ clarccl 03.10.200U antl lrl thc process clisallou cd rhc bcncfit of () t] tr\ clclcrnrcnt oi an arnount oI Rs.]-i,96,681 / and thcrcbl, 7 . otr, cvcr, thc I)cPrrrr-r-rcnt thc olhcr hlnd issucd |orm to on rcstnctcd chgrblc rnptrr rax crcdir r() sum of lts.7l,-18,200/ . Latcr ()n, thcrc w2rs vct anothcr rcr.iscd shorv-caLrsc noticc rssucd in Iiorm 10.5 \ clarccl 22.11 ?OOg r,,.hcr.cir-r rhc disallor,r'encc ,rf the bcncfit of l{s.(r9,42,938/- allcr:rn.q rhar ccrtair.r rnrcr.srarc sale s madc in thc ta\ clcfcrrtrent :,t()()(l crr[ranccd fr, rrn lls.2-i,g(1,(r87/- ackrtorvlcdgmcnt oi r.,u'hich rvas rcccir.c,tl by th. pcriu()ncr nanrc r>l NI/s. J Ii. t)ils \\crc rnore of I'icririorrs narure. ()n rcccipt oI rht' show-causc n()ticc, xnd rcvisccl shorv cause n()ncc, thc pctltl()ncr approacltccl rhc l)cpartmcnt s(ckillg ft,r-.j()mc tinrc ttr cnablc hirn to filc rt:plr,ro rhe shos. causc noticcs. The last rcqucst tnarlc bv thc pctrtroncr ro rhc l)cpartrncnr \\,as on j0.01.20()9, the 3l .0 L2(X)9 -['l-rcreafrcr, rhcrc. rvas n<> Furrhcr clc'ckrpmenr and later .n ir *,as i.frrrmcd [>v thc authorin- c,nccr.ncd tllat an ordcr of the pctitione r was ncvcr scrvcd upon him 8. 'l'hc instant writ petition [ras becn hlcd by the petitioner assailing the said impugned ordcr ftrr morc than one rcasons'

Irirstlv, thc irnpugncd ordcr drted 1'l '02'2009 pnna .facte appears to bc an anti-dated ordcr sincc as latc as on 3001'2009 whcn the pctiu<;ncr approachcd thc Departmcnt seeking thcir indulgcnce to grant some trmc to filc rcplv t() the show causc noticc, the m^ttcr was not considcrcd on mcrits and the petirioncr again approachcd thc l)epartrncnt along with f<rrmal oblections against the show-cause noticc uide l:'x.Pl d*cd '18 12'2009, on which date it rvas [<rr thc first timc inf"rmed tt' the petitioner that thc authorifi'conccrnccl had alreadl' passed an ordcr on 11'02'2009 ' Accorcling to thc Petiuoncr, thc t)cpartmcnt had ptenry of opportunilie s t<> in fl<rrtn the pctiuoner about the naturc o[ activiues as also the naturc oI rclicI that could bc sought fcrr' Pagc 5 oi 12 assessmenI rvas alrcadv passed on 11.02.2009, which according to recordcd by the 10. Sccondlv, in the rwo shorv causc notrccs thcre was no refcrcnce oI NIr. Shri aii's stlttcmcnt rhat was t l)agc 6 oi 12 I)r:p:rrlrncrrr.'fhe so callccl statemcnr oF I\lr. Shivaji lrom M/s. l.K. Orls ruas ncr.cr se rr,cd 11p()l) thc pctitt()ncr so that hc coulcl havc gir c, un cifccd'c 'cPIv. Sirnilarlv, in thc 'cr rscd slr.*. causc n.ticc thcrc is;r rcfcrcrrcc of thc rcport subrnittcd br, the l)cputy (,otnrnissr,rner, Srroornagar, and no gpportuniq, rvrs given ro rhe perin()n(r ro rclutc thc conrcntions :rrtribrrrr.cl bv tirsrlr. I\{t. Shrvaji fronr NI/s -f.K ()ils arrcl sccondlv rhc rcport of thc l)cpuq,. (-..rrnissu r,er, Srr..raagar-. 'f hus, in rhc abscnce .f thc statcrncnt ancl thc'cl)()rt bcing n-raclc a'a ablc r() thc pcritioncr, he cffccri'cly couicl not submit l-ris dclcncc or countcr bc[orc thc (iompctcnt .\urh.ritr. li,r thc said rces.n also, acc.rcli.q t() the pcuti()ncr, the finrlrr-rgs rlilr.n [>v thc authorrtv conccrnccl can bc interlcrcd s.irh. 11. 'l'hc lasr grouncl raiscd by thc pctitioncr was rhat thc order p;tssccl br rhc L\sscssin.q ()fficcr ( \nx.lrl) i: fttr.re bad [rrr rhc rcas.n that thc I)errti()ncr *,as .thcnvisc cntitlccl iirr tle Fcrrncnt of balance of ta: pelablc bv thc Dcparrrrrent t() thc tunc o[ morc than lls.1 crorc. 'l hr.r'c[r)re, c\.en il thcrc \\.2s an\ tat tiabilin. that srands dctclrninccl bv thc l)cperrrnent, thc [)cJrar.rrncnr oughr to had ldjrrstcrl rh. tlx bcnc fit (). ,rcc()Lrnr,I clcfi.rr.c.t .f tar [,r 1-r 'cars i

ia /. Pasc 7 of 12 awarded in favour of thc petirioner and on thc basis of which there was ll balance of morc than Rs.1 crore receivablc by the /." .,/ a Petltloner. 12. 'fhc learncd Special Covcrnmcnt Pleadcr for Statc 'l'ax, on the other hand, opposin!! the wrlt pctition submits that it rvas a casc rvhere thc petitioncr is ftrund to ha','e made some papet arrangements showing thcre tt-r bc ccrtain ffansactions intra-statc madc rvithout thcrc being anv strong materials avarlable According to the learned Special (iovcrnment Plcader, since thcre wcre discrepancies in respcct oI thc huge amount of intra state sales and inter-state sales and thc export being madc as reflected in the papet arrangemcnt, the Asscssing O fflrcer in a verv pre-determined maflner procccded further and without acceding to anY of the requcst madc by thc pcutioncr' straighraway passed the impugned order.

13.

According to thc lcarncd Special Ciovernmcnt Plcader, perusal of the plcadings would qo to show that the pctiuoner has not givcn cogcnt and tangible traterial to substantiatc his claim for I Pagc 8 o[ 12 thc input tax credit. ,\ccording to the lcarncd Special (lovernment Pleacler, mun1. o f the transacrions allcgedlv madc bv the pe riuoncr t crc s,ith firms u,trosc \,'..\'f regstradon already stood cancelled rcflccted \\.'xs rhar thc so called purchase rnade bv the petitioner on (.astor ()rl rvorth more than Rs.17.34 crorcs from N,l/s. J K. Oits again u,as louncl to be {lctitious and thcrc was no material on lrurther, upon cr()ss r.erihcation of various documents what was rccord to s[r<xr,' thc transler of eoods from Ni/s. J.K Oils, ( ia jr-riararna rant, Qurbullapur, R.It. l)isrrict. 'I'hcrc rvas also no matcrial to shorv tl'ret the transfer olpropertv i.e. thc (lastor Oit and thc salcs inr-oicc produccd by the petrtroner was not fictitious one crcetcd to takc input tax credit Fraudulcntlv bascd Frcuuous docurnents ancl purchascs

14.

It s'as lasrll contcnded by rhc lcarned Spccial Ciovcrnment Pleadcr frrr Statc 'l'ax that during thc course of audit onc Mr. Shivaii cleirnins hirnsclf to bc a purchase cxecut()r rvith thc pe titioner has dcposcd t() thc cxtcot o[ thc so-callcd purchase rnade wirh I\,{/s f .K. ()ils bcinu orlh papcr arrangerncnt rvithout thcrc being anv salc or purchlsc unclcrtaken bcnvccn thc pctitioncr and \l/s. J I( on Oils. E

Page 9 o[ 12 Simrlarlv, thcrc was c\:cn a statcmcnt glven bi' the l)epun (-ommissioner, Saroornagar, dcposing against thc petittoncr's cstablishtncnt irrso[ar thc pcttrtr.rrlcr availinq ir-rput tar crcdir [raudulcntly.

15.

Having hcard thc contcuLions Put ft)rth on cithcr sidc and on perusal o[ records, thcrc clocs not sccm to be anv disputc so far ls thc pctiuoncr having put up l.ris establishmcnt and gctting a (i'()' in his favour holcling him to bc enritlcd [rrr rhe salcs tax dcfcrment rtr thc tunc of 1ts.2,49,12 ,190 / - to bc availcd rvithrn l 4 \'cars from 30.03.2000 to 29.03.2014. 'l'herc is also no disputc so far as thc pctitroncr mcanwhile having alreadv avarled thc tax dclermcnt of Its.1,28,83,01 l/' andthcrc was still a brhncc of lls 1,20,29, 119 /- tn his faYour to bc recor.crcd or gcrting adjustcd from thc Statc (iovernment.'t'he Departmcnt, howc"'cr, [<rund cerrain transactions to be dubious, fict-itious and fraudulent 'l'hcrca[tcr' the pctiti<>ner's claim oI input tax credit undcr various hcads stoorl disallorved' L6. [-[owcvcr, what is clcarh" rcflcctccl from thc procccdings is that iniuallv rvhcn thc shos causc ll()tlces wcre issr-rcd, thc

'1 l'agc 10 , r[ 12 [)t'partmcrrr harl lnh' nladc certein rvcrmcflts and contcnti()ns sccking i rr thc pctirl()ncr's cxplanati()n as t<) whv the input tax Pcrr oncr's csrabhshn'rcnt $.lro has dcposccl a[Jairrst thc pcritioncr crt tlit clainrcrl br hinr carrnot be rlisallr>u'ed_ I Ios cvcr, rvhcn rhc irnpr-rg'ncrl orrlcr .,r'as 1'xrssccl, thc [)cpartrnci-rt rchccl up()n thc stalcrncrrr nraclc l.,r X{r Shn.aji, rhc so-called cmplor-ce of thc NI,'S I )cpun- ( -r,rnrnissurncr, lrr lhc ebscrrcc oI tlrcsc Saroornagar. Iloth the sratcmcnt madc by marerials, thc petitioncr was txkcn :lcccprinrl thc ir:t so far:Ls n()n t:\istcncc oFanv transacuon rvith .i r., ( )ils. Sirlilarlr, rhc procccclings rvould also shor.v that thc [)r'plrtmcrrr rrlso rcliccl Lrpon rhc statcmcnr subrnittcd bv thc NIr Shir aji :rnd rhc rcporr subrnittecl bv rhe Depury (.ornmissioncr, Slrr..rnagrlr, aclrnitrcdlr.\\(rc not madc availablc t() thc petiu,.cr r\\1) abrrr-k * h.. tircsc r*rr rnatcrials i.c. rhc starcme.t ancl thc rcp.rt \\ CTC ln tr)l)ut ta\ crt tlit clai;n bt' hirn itnPLrgnc.l orclcr h,rs substrnrivclv prciudrccct rhe irrtcrcsr of rhc p(titi()ncr t[rcrctn ltc u,es tlcprir-cd of rcbr.rttiLrg t() tl]csc matcrials hctvilr rclrccl r.rpon l;v the l)cpartment disalk>rving rhc

77.

Non strPl'rlvrnc oF thcsc nvo rnatcrials bcftrrc lrassing rhc ii.r

Pagc lL <>l 72 at anv point of umc. I t is always rcquired rhat the aurhonh concefncd, paftlcularh: rvhen it passes a judicial or a quasl-judicial order should makc all the materials that arc going to be relied upon by it against rhe delinqucnt so as to get cflecrive explanarion oF the clelinquent on those matcrials.

18.

Clivcn thc aforcsaid edmittcd factual matrix of thc casc, this Ilcnch has no lrcsitation in reaching t() the conclusion that in the abscncc o[ thc materials rclicd upon b1, the Department 1lot being madc avarlablc to the petitioner before passing o[ the impug"ned ordcr cnabling him to gt'c an cxplanation would not be sustainablc in thc evc oilarv. -I'herefore, thc impugncd ordcr datcd 11.02.2009, issued in Form VA'l'305 by the rcspondent, is sct aside / quashcd Sincc thc impurnccl ordcr levi,ins tar upon the pcdtioncr is sct asidc / cluashed by this Bench in Writ Periuon No.8785 of 2009, thc impugned ordcr in Writ Petition No.13017 ol 2009 rvhich is a conscqucntial order passed by the rcspofldent imposing pcnalry as a conscqucncc rvould also stand sct / aside quashcd 19. 'l'he two \\'rit Pe uuons accordinglv stands allowcd

Pirgc 12 ctf 12 20 .\s r sccluel, rrisccllane()us PCtrtions, Pcnding iF any, shall stancl closcd. I Ioucr cr. thcrc sh:rll bc no ordcr ls to costs That Rule Nisi has been made absolute as above' Witness THE HON'BLE THE CHIEi.lusrtce nPaRESH KUMAR SINGH, on this Wed ne aY ' ihe Eleventh Day Of FebruarY Two Thousand And Twenty Six P .SU LEKHA DEVI ANT REGISTRAR //// CTION OFFICER To, 1 The Commercial Tax Officer-l' 1st Floor' Rejesnwari\'dlmplex' By-Pass Road' Khammam

OneCC to SRI S VIVEK CHANDRA SEKHAR' Advocate tOPUCl 3 One CC to SRI SWAROOP OORILLA' SPL G'P for State Tax [OPUCI

Two CD CoPies BSK BS Y{ ,l I i c aI I

HIGH COURT DATED:1 110212026 ( ES 2 5 t'll,R 21126 * trATCI oo COMMON ORDER WP.No.8785 & 13017 of 2009 ALLOWING THE WRIT PETITION WITHOUT COSTS ^t .4\-o tt ffiat C I i I i I I ;