56 co-op sugar mills slapped with Rs 2,500-cr I-T notice

Co-operatives Minister Harshavardhan Patil has said that Income Tax (I-T) recovery notices have been served on 56 co-operative sugar mills in the state demanding Rs 2,500 crore tax on "profits" made by the factories since 2000.

Addressing a press conference at Patrakar Bhavan in Pune on Wednesday, Patil said that most of the mills are from Western Maharashtra but those in other parts of the state are expected to get similar I-T notices in a few days.

"Co-operative mills are fighting an earlier I-T notice seeking Rs 2,500 crore issued a few years ago demanding tax recovery for perceived profits made by these mills between 1984 and 2000. The fresh notice is for 2001 to 2012. The 56 mills have been asked to pay Rs 2,500 crore. The department has threatened to freeze their bank accounts if they fail to pay," said Patil.

"The issue is grave and can lead to a difficult situation. If bank accounts are frozen, mills won't be able to pay farmers for cane or salaries to workers," said Patil.

Karmayogi Shankarrao Patil Cooperative Sugar Factory, Indapur in Pune district, controlled by Patil, is among the mills that received the notice.

He said he has met Chief Minister Prithviraj Chavan on this issue and he is expected to rush to Delhi seeking intervention of Union Agriculture Minister Sharad Pawar and Finance Minister P Chidambaram.

"Our mill has been asked to pay income tax at the rate of Rs 1.5 crore per month till April next year. The total amount is around Rs 110 crore. All the money made by selling sugar has been paid to farmers and the mill is not left with any to pay tax," said Patil adding the notice was unjustifiable as co-operative mills do not make any profit per se.

Patil said the I-T department is demanding tax on payments made over and above the Fair and Remunerative Price (FRP) paid to cane farmers.

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