Kallam Textiles Receives Rs 4.98 Crore Tax Notice

Demand of Rs 4.98 crore for FY 2020-21; company formally disputes the GST tax authority claim.
Reader Takeaway: Tax demand adds complexity to the existing insolvency process; management intends to contest the notice legally.

What just happened

Kallam Textiles Limited has received a Show Cause Notice dated August 27, 2026, from the Additional Commissioner (S.T) of Vijayawada, Andhra Pradesh. The notice, issued under Section 73 of the Andhra Pradesh Goods and Services Tax Act, 2017, alleges a total liability of Rs 4,97,70,714, inclusive of tax, interest, and penalties for the financial year 2020-21.

Why this matters

The company is already undergoing the Corporate Insolvency Resolution Process (CIRP). This new tax liability introduces further financial complexity to an already stressed balance sheet. Shareholders face uncertainty as the firm's assets and liabilities are currently being evaluated within the insolvency framework, and new litigation could alter the recovery path.

What changes now

Kallam Textiles has publicly stated its disagreement with the findings in the notice. The firm is preparing to contest the demand through appropriate legal and procedural avenues. As the company is under CIRP, all material litigation is typically managed in alignment with the resolution professional's strategy to protect the company's interest.

Risks to watch

The primary risk remains the potential financial outflow or the creation of a 'preferential' or 'disputed' creditor status that could impact the distribution of assets. Investors should look for disclosures regarding the legal counsel appointed to handle the dispute and any updates from the Committee of Creditors regarding this specific liability.

What to track next

Watch for subsequent exchange filings detailing the specific grounds of the contest and any formal replies filed by the company. The progression of the CIRP remains the most critical factor for stakeholders in the near term.