The Hindu Business Line : Coonoor tea auctioneers may keep demand for contingency deposit in abeyance

THE tea auctioneers of Coonoor may decide to keep in abeyance the demand for a contingency deposit of 4.5 per cent from upcountry buyers, in the forthcoming auctions.

"Some members of the trade feel that the whole issue should be re-represented to the Government,'' trade sources told Business Line.

There is also talk of a delegation going to Chennai to take up the matter once again with the Government.

When contacted, the executive members of the Coonoor Tea Trade Association (CTTA) said that the decision was of the trade and not that of the association.

Following the controversy over the Tamil Nadu commercial tax authorities slapping a recovery notice on brokers/auctioneers for teas sold at Coonoor and Coimbatore auctions during 1999-2000 and 2000-01 and claiming arrears under TNGST (Tamil Nadu General Sales Tax) for sales made under CST (Central Sales Tax), the tea trade at Coonoor and Coimbatore had decided to ask for an additional 4.5 per cent sales tax upfront as contingency deposit from upcountry buyers before raising the CST contracts.

Outstation buying in Tamil Nadu has since than been severely impacted on account of the sales tax anomaly in the State. This coupled with the TMCO (Tea Marketing Control Order) directive on proxy buying had led to a market decline in buyer participation at auctions.

However, after the recent amendment of the CST manual rules, the trade has seen an improvement in market sentiment. "Just as a solution for proxy buying was found, we would like to be able to resolve this issue also,'' a senior trade member said.

Sources maintain that post-amendment, the market has picked up. There is a perception that if one were to do away with the contingency deposit, there would be a further improvement in sentiment.

"Last week the market was dearer by Rs 2 in the leaf category. Maybe this week the trend would be even better,'' sources reasoned.

Even when the trade is looking to re-represent the sales tax imbroglio with the Government, a section is sceptical over whether this would make any difference at all to the issue at hand.

"One should not forget that the issue is pending in court. Where is the sense in making a representation right now?'' trade sources questioned.

The writ petition filed by tea auctioneers has been pending hearing before the Tamil Nadu sales tax tribunal since December 2003. The next hearing has been scheduled for March 12.