The Hindu Business Line : Coonoor tea auctions to be held under VAT

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Coonoor March 5 The Coonoor Tea Trade Association (CTTA) will conduct its auctions only at the value-added tax (VAT) rate of 4 per cent at the sale scheduled for this Thursday and Friday.

This arises from a meeting convened by the Nilgiris collector of the stakeholders of the auctions in the presence of the tax authorities, an auctioneer said.

This means there may be no sale under the 2 per cent CST.

Exporters enjoying exemption from sales tax so far might also be affected. "So far we have not been levying any sales tax for export purchases, but hereafter, we will levy 4 per cent tax on them. In other words, in the new system, there will be no difference among the purchase for within Tamil Nadu, inter-State sales or exports as far as tax is concerned. Also, hereafter, the factory owners will be directly assessed instead of the brokers so far," an auctioneer said.

Factory owners said this was welcome as they could now claim input credit for the tax paid in their names.

Auctioneers are proposing to re-offer the huge volume of teas that went unsold last week.

Following the instruction of most of the bought-leaf factories to sell their teas only under VAT, many buyers did not pick up these teas. Consequently, only 22 per cent of the leaf grades and 17 per cent of the dust grades were sold last week.

It is the unsold portion of this offer that the auctioneers are planning to bring for sale this week.

Volumes on offer

Initial reckoning shows that around 11.97 lakh kg of teas remaining unsold from Sale No: 8 and 9 might be offered this week. Of this, 8.53 lakh kg belong to leaf grades and 3.44 lakh kg, dust grades.

"But, a clear picture can emerge only in due course because this is not as per the usual closing of the catalogues", an auctioneer told Business Line.

But already for the Sale No: 10 to take place this week, a volume of 6.20 lakh kg has been catalogued comprising 4.37 lakh kg of leaf and 1.83 lakh kg of dust grades. As much as 5.71 lakh kg of this belong to CTC variety and only 0.49 lakh kg, orthodox variety. But, this catalogue might be deferred to pave path for the unsold teas to be pushed out first.

Meanwhile, the auctioneers are working towards reframing their software to re-design the contract raising procedures. "Now, we have to raise the contracts in the names of the factory owners and several individual contracts might have to be raised to satisfy the buyers. This would involve more time and stationery," the auctioneer said.

But, buyers are taking a `wait-and-watch' approach. "If we can afford 4 per cent tax which is double the rate we are bearing now for the inter-State sales, we will buy. For those teas where we cannot find markets for the increased price after the 4 per cent tax, we will have to adjust the bids to cover the tax. In other words, such teas will face discounts. To the extent possible we will claim refunds for the purchases for exports or CST sales if the law allows a lower rate of levy. We are also closely watching the developments in other States where VAT had come into force much before Tamil Nadu," a leading buyer said.