I-T Dept not to attach Maha sugar mills' bank accounts

Cooperative sugar mills in Maharashtra on Wednesday received a much-needed relief as the Central Board of Direct Taxes (CBDT) has agreed not to attach their bank accounts or demand part payment of income tax dues for 2007-08 and 2008-09.

CBDT chairman S S N Moorthy during his meeting with the cooperative sugar mills, also agreed to set up an office of income tax commissioner (appeals) at Pune for speedy hearing of all cases.

The recent Supreme Court directive had asked the commissioner income tax (appeals) to complete the hearing by September.

Sugar mills will have to shell out Rs 3,500 crore towards income tax arrears since 1992-93 according to the income tax department. The department had observed that the amount mills pay as final cane payment is an excess profit. However, the mill owners are of the view that the final cane payment is made after the payment of processing and management charges and it is a part of their expenditure.

Mills have repeatedly argued that they pay advance to cane growers during the crushing season which generally ends on March 31 or gets extended up to June in exceptional cases. The advance payment is paid before the completion of a fiscal. However, the final cane payment is paid in the new fiscal only after it was approved by a committee chaired by the state chief minister.

Cooperative sugar mills had won their cases at the income tax tribunal and the Bombay high court. Subsequently, the matter was heard at the Supreme Court which asked for a detailed review at the CIT (appeals) level.

Sources at the Federation of Cooperative Sugar Factories in Maharashtra, who took up the matter with CBDT, told Business Standard, “To cite an example, Rajarambapu Patil cooperative sugar mills, which operates in the sugarcane rich Sangli district of western Maharashtra, received a demand notice from the income tax for Rs 17 crore for 2007-08. The Mill aruged that this money was not with it as it was paid to farmers as cane price and it cannot be called back.” However, the department had insisted to make a part payment of Rs 12 crore which was not possible for the mill.

Prakash Naiknavare, the managing director of the federation said, “At a time when sugar prices are dwindling this was some kind of a relief to mills who need to now do a lot of homework and come prepared for putting up the case effectively to the CIT appeals whose working will start soon.”