Punjab-based private sugar mills today sought abolition of purchase tax on sugar cane, saying low sugar prices and high input cost hit the industry hard.

The demand was made by a delegation of sugar mills under the banner of Punjab Private Sugar Mills Association which met Punjab Deputy Chief Minister Sukhbir Singh Badal here.

The Deputy CM assured the delegation that the state government would consider their demands.

The delegation sought the abolition of purchase tax on sugar cane under the Punjab VAT Act with effect from the crushing season of 2013-14.

"The sugar mills in Punjab have been suffering because of low sugar prices and high cane prices which have made their mills uncompetitive," Association President Jarnail Singh Wahid said.

Against the industry's input cost of Rs 35 per kg, the wholesale price of sugar is prevailing at Rs 32.10 per kg, he said while pointing out that it had become unviable for them to run their mills.

He said the Punjab government is levying 2.5 per cent purchase tax on sugarcane which works out at about Rs 10 per quintal.

"There is no tax in sugar producing states like Maharashtra and Uttar Pradesh but Punjab levies tax on cane," he said adding that sugar mills in Punjab are also paying cess on cane at a rate of 50 paise per quintal, besides purchase tax.

He further said despite sugar surpluses, millers were unable to export the same since the production cost was too high and sugar exports have become unviable.

The industry suggested that the state government could also look at the option of bringing purchase tax on par with that of neighbouring state Haryana. In Haryana, the purchase tax on cane is Rs 1.5 per quintal.

On the request of industry, Badal informed the delegation that the state was ready to take pending purchase tax on sugar cane from April 1, 2005, to November 19, 2011, in installments.

Punjab sugarmills are to pay purchase tax to the tune of Rs 113 crore.

Referring to another demand put forth by the association to waive off the interest/penalty over the due amounts, Badal said the government would take this issue to the cabinet where the final decision would be taken.

Meanwhile Deputy CM assured that decision on their demands would be taken soon and he directed officers of Excise and Taxation Department to come out a proposal securing the interests of sugar mills by next week.