Chavan leads delegation to argue sugar mills' case on I-T arrears

Finally, the Maharashtra government has stepped in to take up the Rs 2,500-crore demands of the Income Tax department towards arrears from sugar cooperative mills since 1992-93 . CM Prithviraj Chavan would lead a high-level delegation to plead the millers’ case during the proposed meetings on Wednesday with the PM and the Finance Minister.

Millers have argued the payment made to cane growers was the price of the raw material supplied by them and therefore was a business expenditure. The principle of distribution of profit does not apply to cooperative sugar mills.

The state government’s intervention is crucial as the Commissioner of Income Tax (Appeals) in recent orders had ruled the additional payment made by the mills over and above the statutory minimum price (SMP) was not cane price but diversion of profit. There are 102 cooperative mills who would have to pay I-T arrears pending since 1992-93.

A government official said, “The delegation will apprise the PM and the finance minister about payment made to sugarcane growers by cooperatives. In Maharashtra, the cane price is fixed by the ministers’ committee chaired by the CM. The cane price is always higher than SMP depending on factors like crushing, recovery, technical efficiency of mills.”