Maharashtra sugar mills get IT notice for paying cane prices above FRP

PUNE: The income-tax department has served notices on Maharashtra sugar mills for paying cane price over and above the fair and remunerative price (FRP) fixed by the government.

According to the state co-operation minister, the I-T department has assessed the dues of the sugar industry at Rs 5,000 crore for the period from 1984 to 2011.

Most of the sugar mills in top sugar producer Maharashtra are concentrated in the co-operative sector. Co-operatives do not pay any income tax because they say the profit generated is distributed among member farmers.

However,according to the I-T department, the money paid to farmers above the FRP is profit and hence attracts income tax. According to state co-operation minister Harshvardhan Patil, the department has assessed total I-T dues of the sugar industry during the 1984-2000 period at Rs 2,500 crore, on which court cases are currently going on.

The dues from year 2000 to 2011 are Rs 2,500 crore further. The sugar industry has demanded that there should not be any income tax on sugar mills.

"The I-T department sent notices to 56 sugar mills about a week ago and asked them to pay the I-T dues and the rest are likely to get it in the next few days. The chairman of the Central Board of Direct Taxes has conveyed that they cannot do anything in this case. The mills may have to face seizure of their accounts of the dues not paid. But we cannot pay the tax as mills do not have money left with them. It has been distributed among farmers," said Patil.

"We will have to meet the senior ministers at the Centre in the next few days. Otherwise, it will be difficult to make cane payments and run the mills."

Meanwhile, sugar crushing operations in the state have been streamlined after the violent agitations of cane farmers for a higher first advance payment.

The sugar commissionerate expects to crush about 525 lakh tonne to 550 lakh tonne sugar cane in the ongoing 2012-13 sugar season.

"Of this, 137 sugar mills have crushed 90 lakh tonne sugar cane. Sugar recovery is expected to be slightly higher than last year," said Patil.

source: ET