HC stays levy on sugar factories for relief funds, questions state’s legal authority

The Bombay High Court has stayed Maharashtra's levy on sugar factories for crushing licenses, ruling the state lacks legal authority to impose such charges.

MUMBAI: The Bombay High Court has stayed the Maharashtra government’s directive requiring sugar factories to pay specified levies to various relief funds as a precondition for obtaining crushing licences, holding that the state lacks the legal authority to impose such charges.

HC stays levy on sugar factories for relief funds, questions state’s legal authority

A division bench of justices Revati Mohite Dere and Sandesh D Patil observed that if the petitions challenging the levy ultimately succeed, the state government would be required to refund the amounts already collected, along with interest. The court also directed the government not to deny crushing licences to sugar factories for non-payment of the levy and asked it to file its reply within four weeks. The matter has been posted for further hearing on January 14.

The petitions were filed earlier this year by Baramati Agro Limited, a company led by NCP (SP) MLA Rohit Pawar, along with other sugar factories. They challenged a letter issued by the Commissioner of Sugar on October 27, 2025, which directed all sugar factories to pay a levy of ₹10 per metric tonne of sugarcane crushed per season towards the Chief Minister’s Relief Fund (CMRF), ₹5 per metric tonne towards the Flood Relief Fund, and ₹10 per metric tonne towards the Gopinath Munde Sugarcane Workers Welfare Corporation.

According to the petitioners, the state government made payment of these amounts a mandatory condition for securing a crushing licence for the 2025–26 season. Senior counsel Girish Godbole, appearing for the petitioners, argued that the levy was illegal and contrary to the provisions of the Maharashtra Sugar Factories (Reservation of Areas and Regulation of Crushing and Sugar Supply) Order, 1984. He contended that the move amounted to “clear executive overreach without any statutory backing”.

Godbole informed the court that the factories had deposited the demanded amounts under protest. However, he submitted that the issue needed final resolution as the levy had been imposed merely through executive communications, without any statutory force, and therefore could not be made compulsory. The petitioners maintained that they were effectively coerced into paying the levy, as non-payment would result in denial of licences for the crushing season.

In its interim observations made on December 24, the court held that the amounts sought to be collected under the government resolution lacked statutory backing and that the State “has no right to enforce levy upon the petitioners”. It noted that contributions to the CMRF, admittedly a trust registered under the Bombay Public Trusts Act, as well as to the Flood Relief Fund, are voluntary in nature. Consequently, the court said, the government cannot withhold licences to compel such contributions, particularly in the absence of a legal framework authorising the levy.

The bench further underscored that an executive order cannot substitute the constitutional requirement for imposing a tax or levy. Referring to Article 265 of the Constitution, the court observed that no tax or levy can be collected except by authority of law, and that even the powers claimed by the State in this case did not stem from any law or rules framed under the Constitution. On these grounds, the court stayed and set aside the October 27 letter issued by the Commissioner of Sugar.