The Hindu Business Line : Tamil Nadu tea sales tax row blows over

IN a move that has sent a wave of relief across the tea industry, the Tamil Nadu Government has, in principle, agreed to accept, in future, all inter-state sales as one under Central Sales Tax (CST) and not under Tamil Nadu General Sales Tax (TNGST) rules.

"However, it is essential that after auctions are concluded, the sale be declared as a CST sale, with the party and destination identified," Mr M. Bhojarajan, President, Nilgiris Small Growers Association, told Business Line.

According to Mr Bhojarajan, the Government has assured that if a buyer were to strictly adhere to the CST manual rules, as enforced or laid down by the tea trade associations of Coimbatore and Coonoor, it will not interfere in the status of the sale.

Mr Bhojarajan had recently headed the delegation of the tea trade body that had visited Chennai with the hopes of resolving the CST-TNGST imbroglio. The delegation had met the Finance Secretary Mr N. Narayan and the Secretary, Commercial Taxes, Mr Rajaretinam, to apprise them of the travails of the industry.

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

Outstation buying in Tamil Nadu had since then been severely impacted, with upstation buyers keeping away from the auctions. However early last month, the tea auctioneers of Coonoor decided to keep in abeyance, the demand for a deposit, for at least three weeks, so as to be able to re-represent the whole issue to the Government.

This move coupled with an earlier decision by the tea trade associations of Coonoor and Coimbatore to amend their CST manual rules has brought about some succour to market sentiment.

Despite these measures, the sceptre of the Central and State Government sales tax issue has continue to hang over the trade. "The recent visit has, however, infused a ray of optimism within the trade and a belief that the issue over the arrears too would be dealt with summarily," trade sources said.

It is learnt that the Government is confident of resolving the issue at the earliest. But as the matter is pending before the State Tribunal and with the Tribunal Judge having retired as of March 31, the Government will have to seek legal opinion on the matter once elections are over.

Backed by the assurance of the Government, the tea auctioneers of Coonoor have decided not to collect the contingency deposit of 4.5 per cent for the time being or till such time the issue is resolved.