The Supreme Court has given Maharashtra’s cash-short cooperative sugar factories a breather, for now, from the income tax department’s latest demands for payments pertaining to earlier years.

Demands had been issued by the Pune office of the I-T department for Rs 2,500 crore of tax payments for the years between 1991-92 and 2007-08, followed by a fresh set of demands for Rs 2,000 crore for the period 2008-10.

A two-judge bench of the SC decided on Friday to refer the entire matter to a larger bench. The additional demands for tax were made on certain payments to cane growers; the I-T department believes these amounted to distribution of profit. The factories argued these were done to ensure adequate and consistent supply of the fresh cane, essential for continuous operation of sugar factories.

State chief minister Prithviraj Chavan had supported the co-ops’ stand and asked the tax department not to resort to coercive action.

Ankushrao Tope, director, National Federation of Cooperative Sugar Factoriesand the Federation of Cooperative Sugar Factories of Maharashtra, told Business Standard: “A review petition will be filed in the SC, either collectively by the 150-odd cooperative sugar factories or by the Federation, requesting the court to take a combined hearing on the related matters. A representation will also be made to (the tax authorities), requesting to direct the income tax offices in Maharashtra to stop coercive action of tax recovery from cooperatives.”