Along with unpaid cane growers, now Income-Tax officers have come knocking at the doors of cooperative sugar mills in the state. The I-T department says 22 cooperative mills owe it more than Rs 1,200 crore in unpaid taxes.
Sources said for the last 20 years, I-T officers have been raising the issue of unpaid taxes by mills who have paid over and above the Fair and Remunerative Price (FRP) to growers. “The Income-Tax department feels payments over and above the FRP constitute profit on income and is distributed among the members. Tax demands are raised on such payments,” said an industry insider.
The department has zeroed in on 15 mills, raising tax demands of more than Rs 25 crore and cumulative tax demands of more than Rs 1,100 crore. Of the 15 mills, three mills have tax demands of more than Rs 100 crore while two have tax demands of over Rs 90 crore.
Three mills have unpaid tax demands of more than Rs 70 crore and rest of the mills have unpaid tax demands in the range of Rs 50-20 crore. There are seven mills whose tax demands are between Rs 3 crore and Rs 25 crore.
Interestingly, almost 90 per cent of the mills are from the sugar-belt of Western Maharashtra. Most mills are from the districts of Satara, Sangli, Ahmednagar, Solapur and Pune.
Jayprakash Dandegaonkar, vice-president of the Maharashtra Sugar Cooperative Factories Federation, questioned the I-T department’s tax demands. “Cooperative mills are examples of successful partnerships among farmers. Payment over FRP can hardly be constructed as profit from income,” he said.
In 2007-08, the cooperative mills had filed a case against the I-T department over the issue. Dandegaonkar said the millers had engaged eminent lawyer Harish Salve to argue their case.
“However, Salve had to leave for London so through the intervention of former Union Agriculture Minister Sharad Pawar, we have asked former Union Finance Minister P Chidambaram to argue our case. The case will come up before a three-judge bench hopefully soon,” he said. Dandegaonkar said the millers led by Pawar had met both the prime minister and the Union finance minister to discuss the issue. “If the Supreme Court upholds the decision of the I-T department, then the cooperative mills would be in deep financial distress,” he said.