Sugar mills in Maharashtra are finding the going tough. Even as the deadline for payment of fair and remunerative price (FRP) is fast approaching, the case related to income tax (IT) dues (R5,658 crore for the period 1992-93 to 2009-10) is likely to come up for hearing in the Supreme Court in the first or second week of February.
If the mills fail to pay up the FRP dues for the cane crushed in November, the Sugar Commissionerate has decided to go ahead with the Revenue Recovery (RR) measures. To tackle this, mill owners in the state have decided to meet former Union agriculture minister Sharad Pawar and urge him to intervene in the matter.
Mill owners will be meeting Pawar in Pune on January 29 to discuss the FRP issue and also decide a strategy to tackle the case coming up in the court. Mills in the state have sought Centre’s intervention for providing an assistance of R700 per tonne and soft loan so that they could pay the FRP to cane growers. According to Sanjiv Babar, MD, Maharashtra State Cooperative Sugar Factories Federation ( MSCSFF) said this is a very tense period for the mills that are going through a crisis due to lack of funds. The first deadline for payment of FRP comes up on January 31 for the cane crushed in November. However, several mills have not been able to make payments and there is serious concern in the industry over the falling sugar prices. he said. ” In the last 5 years, sugar prices have fallen by 14% while FRP has gone up by 70%, he said. As on date, sugar prices are at R2,440-R2,480 per tonne.
According to Vipin Sharma, Maharashtra sugar commissioner, around 50 mill owners from Kolhapur, Satara and Ahmednagar districts had met him on Tuesday. Almost 18 mills in Kolhapur have made the FRP payments. We have to wait and see the situation on February 1 when we will understand how many mills have paid up the FRP. If that does not happen, the Commissionerate will be forced to go ahead with the Revenue Recovery Orders, he said. The Commissioner has decided on a three step deadline for these mills before finally resorting to Revenue Recovery orders to seal sugar godowns, plant and machinery and assets of these mills. So far, show-cause notices have been issued to 117 factories including, cooperatives and private mills, for non-payment of FRP to cane growers despite the commencement of current crushing season from November 1. For the sugar cane crushed in November, 2014, mills have been given time to pay FRP payments till January 31.
Significantly, the review petition filed by few cooperative sugar factories in 2012 is expected to come up for hearing in early February in the Supreme Court. The IT department is of the view that the difference between the higher rate offered by sugar factories and the FRP is considered as their profit and, hence, the amount is taxable. Last year, the department had decided not to take coercive action against the mills after a delegation from the federation had met the IT commissioner. A separate delegation had also met the chairman of CBDT and an assurance was given that no coercive action would be taken against the mills.The commissioner then had sought a specific proposal from the mills seeking information on the taxes that were paid to the mills and the amount of taxes which were due to the department. According to senior officials from the federation, R2,400 crore in tax was dues to the I-T department last year. This year, the mill owners hope that Pawar will be able to find a way out of both contentious issues.