Bombay HC Stays Maharashtra's Mandatory Sugar Mill Levies for Relief Funds

A Bench comprising Justice Revati Mohite Dere and Justice Sandesh D Patil, on December 24, 2025, observed that the State Government has no statutory authority to enforce such levies and cannot withhold licenses unless these contributions are made.

The petitioners, Baramati Agro Limited, Athni Sugars Limited, Lokmanga, Agro Industries Limited, and other sugar factories, had moved the High Court challenging a letter dated December 12 last year, along with various government resolutions and orders issued by the Commissioner of Sugar.

These directives mandated the contributions per metric tonne of sugarcane crushed. The mandate charged ₹10 per metric tonne of sugarcane crushed per season to the Chief Minister's Relief Fund (CMRF), ₹5 per metric tonne to the Flood Relief Fund, and ₹10 per metric tonne to the Gopinath Munde Sugarcane Workers Welfare Corporation.

The State made these levies a mandatory precondition for obtaining crushing licenses for the 2025-26 crushing season, which was scheduled to commence on November 11, 2025.

Advocates appearing for the petitioners argued that the levy was entirely illegal and contrary to the provisions of the Maharashtra Sugar Factories (Reservation of Areas and Regulation of Crushing and Sugar Supply) Order, 1984.

It was contended that the State's decision was an "executive overreach" without any statutory foundation.

The petitioners further emphasised that their clients had deposited the amounts under protest, while their plea challenging the mandate remained pending, owing to the urgency.

They distinguished between 'duty', 'cess' and 'fees', arguing that each has a different legal connotation and that the impugned levy lacked statutory force.

Specific objections were raised regarding each component. First, as regards the CMRF Contribution (Rs 10/- per MT), the advocates for petitioners argued that the CMRF is a fund established under the Maharashtra Public Trusts Act, and the State cannot compel contributions to a public trust as a precondition for granting licenses, as contributions to such trusts are voluntary in nature.

Second, with respect to the Welfare Corporation Contribution (Rs 10/- per MT), it was contended that the Gopinath Munde Sugarcane Workers Welfare Corporation was established through a Government Resolution dated January 2022, ostensibly for the welfare of sugarcane harvesting workers, but there is no statutory provision mandating such contributions.

Third, regarding the Flood Relief Fund (Rs 5/- per MT), it was argued that compulsory contributions towards this fund also lack statutory backing and therefore cannot be made mandatory.

Despite notices being issued and multiple opportunities granted, the State Government failed to file its affidavit in reply, it was argued. Additional Government pleader M M Pabale sought further time to file the response, which was vehemently opposed by the petitioners' counsel.

After hearing the parties, the Bench formed a 'prima facie' opinion that the State Government has no right to enforce the impugned levies in the absence of statutory backing.

The High Court, prima facie, held that an executive order or rule cannot substitute for the requirement to levy tax under Article 265 of the Constitution of India, which mandates that no tax shall be levied or collected except by authority of law.

The High Court also noted that the CMRF is admittedly a trust registered under the Bombay Public Trusts Act and that contributions to the trust are undisputedly voluntary.

The Government cannot use its powers to withhold licenses unless contributions are made to the CMRF, it added.

The HC further noted that, despite having had sufficient opportunity, the State failed to file its response, thereby warranting interim relief in favour of the petitioners.

Thus, the High Court has granted ad-interim relief to the petitioners by staying the operation and implementation of various letters and Government Resolutions issued by the Commissioner of Sugar and the State Government. The State was also directed not to deny crushing licences to the petitioners for non-payment of contributions towards the CMRF, the Welfare Corporation and the Flood Relief Fund.

The High Court clarified that all contributions made so far shall be treated as having been made under protest and will be subject to the outcome of the writ petitions, with a direction for refund along with interest, if the petitioners succeed.

The HC has granted four weeks to the State government to file its affidavit in reply and listed the matters on January 14.

- ANI