It all came to light when, when Kadapa Deputy Commissioner of Commercial Tax K Srinivasa Rao had issued notices in routine manner to Proddatur-based Varada Agrotech and Raghavendra Traders for clearing the VAT dues.

To his utter surprise, the traders in their reply claimed that they were exempted from tax as they procure foodgrains from farmers and sell them to AP Seeds.

“Suspecting something fishy I enquired as to who is eligible for tax exemption. We found that traders who procure foodgrains from farmers, process them in their own processing units and resell the foodgrains to farmers, are exempted from VAT. But, the foodgrain merchants are not doing that, they are only procuring the seeds and selling it for profit to AP Seeds and it is AP Seeds which is exempted from the tax and not the merchants,” Srinivasa Rao told to this website's newspaper.

Further, these traders in Proddatur have not submitted any records pertaining to purchase and sales of food grains.

Not discouraged, Commercial Tax Department of Kadapa sought the information from AP Seeds and found that not only two food grain merchants in Proddatur, but another 14 merchants in the district have evaded the VAT in a similar manner.

In subsequent inquiry it was found that another 70 food grain merchants in the State have evaded VAT in the same manner.

All the merchants were issued notices to pay their VAT dues and in response Proddatur based Raghavendra Traders appealed in ‘VAT Advance Ruling Committee’, which after conducting inquiry made it clear that the merchants were not allowed any exemptions and they have to pay the tax.

As the ruling of the committee is applicable to all traders, no others have gone for appeal again.

Following the ruling, Commissioner Commercial Taxes Ranjeev R Acharya on June 1 directed the deputy commissioners in the State to recover the amount by the month-end and if the traders refuse to oblige, their deposits with AP Seeds Corporations will be confiscated, the Deputy Commissioner said.