Maharashtra: No coercive move on sugar co-op tax dues

Sugar mill cooperatives in Maharashtra have got official assurances on no coercive action to recover Rs 2,500 crore in income tax dues since 1992-93.

An old legal dispute in this regard was recently decided in favour of the tax department by the Commissioner of Income Tax (Appeals).

During meetings with the Prime Minister and Union finance minister last evening in New Delhi, a delegation lobbying for ther mills, led by state chief minister Prithviraj Chavan, was given an assurance in this regard.

The delegation wanted an assurance against any freezing of accounts on the 150-odd mills affected. The delegation was, however, advised to tell the mills to formally approach the appellate I-T tribunal for a stay on the order in question.

A state government official told Business Standard the delegation also wanted the PM and FM to get the Central Board of Direct Taxes (CBDT) to not proceed with a decision on new taxes. It also wanted guidelines for payment made to cane growers over and above the Statutory Minimum Price (SMP) to be treated as admissible expenditure and not as distribution of profit (the issue in the tax dispute in question), amendments to relevant laws and exempting sugar cooperatives from paying taxes. “The finance minister observed that the sugarcane factory price is a part of the total expenditure involved. Issuing a circular in this regard can be done after proper consideration of all issues and he asked for a proposal in this regard,” the official said.

Vijaysinh Mohite-Patil, chairman of the Federation of Cooperative Sugar Factories in Maharashtra, said every year the sugarcane produce turnover was Rs 20,000 crore, of which Rs 3,000 crore went to the state exchequer. There were two million cane producing farmers and nearly a million workers were directly dependent on them. The recent tax imposition decision by CBDT would affect all of them.

The delegation also wanted a stay on a circular issued by CBDT in the year 2007 regarding tax setoffs for harvesting and transport expenses. It wanted CBDT to release a fresh circular, saying the cane price actually paid by millers to the farmers wasa part of their expenditure.