Chavan to seek Pawar, FM intervention on I-T notices to co-op sugar units

Augar sugar cooperative factories in Maharashtra have started receiving recovery notices from the income tax department for early years, even as they are under pressure from farmers’ unions to pay the first advance of Rs 3,000 a tonne for sugarcane.

The tax demands issued by the I-T office in Pune for 2008-09 and 2009-10 are for Rs 2,000 crore. State Chief Minister Prithviraj Chavan is expected to rush to Delhi, seeking intervention from Agriculture Minister Sharad Pawar, Finance Minister P Chidambaram and the Central Board of Direct Taxes chairman, for an interim stay.

Incidentally, one of the notices has gone to the Karmayogi Shankarrao Patil Cooperative Sugar Factory in Pune district, founded by state cooperation minister Harshvardhan Patil’s uncle. About 30 factories from Pune and Solapur districts have received notices and more in the rest of Maharashtra are expected to get these.

Patil told Business Standard: “The Karmayogi Shankarrao Patil factory got a notice three days ago, demanding tax payment of Rs 1.5 crore per month till April next year. If the factory fails to do so, the department has said its bank account will be sealed, a situation wherein it won’t be in a position to make any cane payment. Ultimately, the factory will have to be closed.”

Patil said the demand is for tax on payments made over and above the statutory minimum price to cane farmers, later termed the Fair and Remunerative Price (FRP). According to the minister, the department’s view is that the payment made by factories above the FRP is profit.