The Hindu Business Line : Rs 6 cr worth of teas unsold at Coonoor auctions

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Coonoor March 4 Tea worth over Rs 6 crore went unsold at the auctions of the Coonoor Tea Trade Association here with the majority of the sellers of bought-leaf factory teas insisting on the sale to be made only under VAT rates and the buyers choosing to purchase only those teas for which they were prepared to pay VAT rate.

Since there was disagreement among the sellers, buyers and brokers over the conduct of the auctions under the VAT regime, Sale No: 8 scheduled for last week did not take place. This week, this sale was conducted jointly with Sale No: 9.

In all, the catalogue showed a total volume of 15.09 lakh kg comprising 8.06 lakh kg of Sale No; 8 and 7.03 lakh kg of Sale No: 9. Of the 15.09 lakh kg, 10.94 lakh kg belonged to the leaf grades and 4.15 lakh kg belonged to dust grades. Again, as much as 14.03 lakh kg belonged to CTC variety and only 1.06 lakh kgs, orthodox variety.

"We have instructions from the bought leaf factories in our catalogue to sell their teas only under VAT. But, this was not agreeable to a majority of the buyers. So, only 22 per cent of the leaf teas and 17 per cent of the dust teas could be sold", an auctioneer told Business Line.

An analysis of the sale pattern reveals that around 8.53 lakh kg of the leaf grades worth about Rs 4.18 crore on the prevailing market prices went unsold.

Likewise, some 3.44 lakh kg of dust grades worth around Rs 1.84 crore remained unsold. In all, more than Rs 6 crore worth of teas went unsold in an auction where teas worth around Rs 7.6 crore were offered for sale.

Among the corporate buyers, Tata Tea was active. Hindustan Lever Ltd (HLL) chose some good medium varieties.

There was some buying for Pakistan market. Generally, prices rose Rs 2 a kg over the last sale.

The last fortnight saw hectic activity among the sellers, buyers and brokers holding a series of heated meetings and making representations highlighting their respective stands on the VAT issue.

VAT attracts 4 per cent tax on tea and some bought leaf factories have reportedly received notices from the tax authorities asking them to comply with this tax level becoming direct assesses. So, the bought leaf factory owners are insisting on conducting the sale under VAT regime forthwith. The buyers have pointed out that VAT has replaced only the Tamil Nadu General Sales Tax Act and not the CST which entails them to buy at 2 per cent tax.

The exporters contend that they were exempt from sales tax and, hence, the 4 per cent levy under VAT did not apply to their relevant purchases.

The brokers have asked for more time to change their software and comply with the new pattern of raising contracts which also involved more time and stationery.