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Deeptha Rajkumar

Wellington (Nilgiris) , Aug. 20

IN a turnaround of events, tea brokers in the Nilgiris have "deferred" seeking additional 4.5 per cent sales tax as contingency deposit from their upcountry buyers before raising CST contracts.

The decision was taken at an emergency management committee meeting of the Coonoor Tea Trade Association (CTTA) on Wednesday.

When contacted the CTTA chairman, Mr Gurumurthy Madhagowder, told Business Line that the auction on Thursday and Friday will go ahead as normal.

Tea brokers in the Nilgiris had decided to ask for a contingency deposit in response to the State Government's recent diktat claiming Tamil Nadu General Sales Tax Act (TNGST) rates for all teas sold.

However, trade sources said given that the association was making a representation to the Commissioner, Taxes, Chennai, seeking clarity on the issue, it was unanimously decided to defer the decision till such time appropriate feedback was received.``The decision has been deferred and was taken in part to avert a payment crisis in the industry and to ensure that the tea auction does not collapse,'' Mr L.C. Singhania, President, Tea Buyers Association of Coonoor and proprietor of Jayashree Tea Traders, said.

The Commercial Taxes Department had issued recovery notices to all tea brokers/auctioneers who had sold their teas through the Coonoor auctions in the assessment years of 1999-2001 claiming tax under the Tamil Nadu General Sales Tax Act (TNGST).

In affect what this means is that brokers in their role as assessees for the commercial tax department would have to cough up tax anywhere in the region of 8.4-12 per cent — the 8.4 per cent (surcharge included) as TNGST and an additional 4 per cent as CST if movement of goods outside the State was affected. Otherwise, CST in Coonoor is currently 4 per cent.

However, a section of the industry, which has sought independent legal counselling, is of the view that the Government decision to convert all CST sales into TNGST can be challenged in a court of law. `So far sales of CTTA has been conducted as per the CST manual and in now way can it be converted to TNGST. Besides the CST rules were framed in consultation with sales tax authorities,'' trade sources argued.

There is also a strong resistance to the fact that the onus on liability being put on brokers and commissioning agents when as per rules the sales tax liability should be on the buyer. Yet sources in the know, point out that as per a Madras High Court ruling, only sales that is completed ``under the hammer'' will attract TNGST.

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