The Income-Tax (I-T) department has served notices on 56 co-operative sugar mills in Maharashtra, demanding the co-operatives to pay Rs 2500 crore in tax on "profits" their sugar mills pocketed since 2,000.

According to the I-T department, the Maharashtra sugar mills paid cane prices above the fair & remunerative price (FRP) set by the government. As most of the sugar mills in Maharashtra are operating in the co-operative sector, they do not pay any income tax because they claim the profit generated from the activity is dispersed among member farmers.

But, the I-T department argues that the money distributed among farmers above the FRP is profit and therefore the mills need to pay income tax on that amount.

For the period from 2,000 2011, income tax dues are Rs 2,500 crore; while dues for the period from 1984 to 2011 soar to Rs 5,000 crore.

Making revelation about the notices, Co-operatives Minister Harshavardhan Patil also said that the I-T department had warned that it could take steps to freeze bank accounts of the mills in case they fail to pay the dues.

Speaking on the topic, Mr. Patil said, "The 56 mills have been asked to Rs 2500 crore and the department has threatened to freeze bank accounts of the mills if they fail to pay."

Mr. Patil added that he already had met the state's Chief Minister Prithviraj Chavan on the matter, and he would talk to Finance Minister P Chidambaram and Union Agriculture Minister Sharad Pawar to solve the issue.