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Sunday, Oct 20, 2002

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ST officials raid edible oil cos in Chennai

Our Bureau,

CHENNAI, Oct. 19

RAIDS carried out by sales tax authorities on at least two major players in the city's edible oil market have unnerved the entire trade here. Deliveries have been halted and further deals have ceased.

The authorities are said to be investigating alleged evasion of sales tax on "high-seas sales" of palm oil and other oils. A high-sea sale involves transfer of ownership of import cargo from the original importer to another party before the goods enter the customs area. The practice of such sales has been widespread.

Applicability of sales tax on high-seas sales, especially on liquid bulk cargoes that arrive in commingled form, has been a disputed subject. According to experts, sales tax on such transactions will not be applicable only if the imported cargo is easily identifiable.

In case of commingled cargo, say palm oil in bulk brought in by more than one importer and stored in same hold or tank, it may not be possible to identify any specific part of the cargo as belonging to an importer.

However, importers have been merrily entering into such sales contracts. While some traders paid the tax, others have sought to raise a dispute. There are also cases of bond-to-bond transfer of imported cargo.

Applicability of sales tax on such transactions has also become contentious.

For edible oil dealers in Tamil Nadu, turnover tax and multiple taxes have become a serious handicap to do business. The State Government is said to be unconcerned about the plight of edible oil trade. No wonder then that import volumes through Chennai Port have been declining steadily.

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