Govt finds evidence of mills selling sugar ‘off the book’

ISLAMABAD: The Punjab government claimed on Saturday that officials associated with its Cane Department got hands on some “conclusive evidence” against several sugar mills which were selling sugar "off the book" in an apparent attempt to dodge taxes.

"There is a strong circumstantial evidence of huge quantities of sugar being sold off-the-book. Following facts point to this illegal practice. If off-the-book purchases from the middlemen and the purchase centres are accounted for, figures of off-the-book sale of sugar go much higher. They (millers) have established their purchase centres in the field where sugarcane is purchased from the farmers. Almost all the sugar mills were found not issuing cane purchase receipts (CPRs) at these centres," cane commissioner Punjab revealed in a letter written to the Punjab Industries Department.

The official revelation comes months after the Inquiry Commission on Sugar traced around 40,000 unregistered buyers who were involved in transactions of billions of rupees—a move that led the investigators to trace the actual culprits who extracted over Rs100 billion as extra profit directly from pockets of consumers last year. The commission members also identified around 3,000 brokers and middlemen who controlled monopoly over the domestic sugar market and helped millers earn extra profit. Investigators also claimed that the millers and brokers have doggedly sold out of books (tax evaded sales) sugar worth billions during the past five years. "There is a strong evidence that the sugar mills are under-reporting the rate of sugar recovery. Labs of Sugarcane Research Institute (SRI) and the cane commissioner’s office have been checking the recovery rate. Average recovery rate till date comes to 10.70 percent as against 09.00 percent reported by the sugar mills on 13-01-2021," stated Cane Commissioner Punjab Zaman Wattoo in his letter. So far, 19.333 million metric ton sugarcane has been crushed by the sugar mills as per their own reports. Millers have reported production of 1.714 million metric tons of sugar, whereas, as per average recovery rate of the government labs, total production of sugar from the aforementioned quantity of sugarcane should be 2.069 million metric tons, reads the letter.

"Sugar mills have not provided any record of sugarcane purchased at these purchase centres despite repeated requests by the cane commissioner’s office, action for which will be taken in due course of time. Same is the case with sugarcane purchased from the middlemen," reads the letter.

Pakistan Sugar Mills Association in its response rebutted the Punjab government's claim. The body asked the federal government to take action against the middlemen to control the hike in sugar prices. The government should ensure availability of sugarcane on determined official price, a move which could help millers to process their production on low cost, said President PSMA Punjab Chaudhry Zaka Ashraf. The Punjab government was not cooperating with mills owners after it introduced the new laws which forced millers to kick off the crushing season with lowest recovery rate, Zaka Asharf told The News. The "off the book" issue involves "contractors and middleman mafia" which forced millers to purchase sugarcane on highest price which now crossed Rs260 per 40kg, he added. "Millers wanted to get rid of this (middleman) mafia to make it a smooth and regulated business," he said.

"The middlemen are sugar mills (themselves). Without their support they cannot purchase cane (from farmers in Punjab). The district administration has sealed more than 300 weigh bridges and registered around 250 FIRs against middlemen and illegal weigh-bridges. Sugar mills should refuse to buy sugarcane from middlemen," Zaman Wattoo said.