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Deeptha Rajkumar

Wellington (Nilgiris) , Oct. 9

The Tea Auctioneers Association of South India (TAASI) has urged the Tamil Nadu Government to introduce a flat rate of 2 per cent tax on auction sales of tea through the Coonoor Tea Trade Association and the Tea Trade Association of Coimbatore.

In a memorandum to the Chief Minister, Ms J. Jayalalithaa, TAASI said trading activities for inter-state sales which was predominant among the North Indian buyers due to a favourable tax rate at the auction level, had come to a standstill in the South due to the high tax rate at the auction point.

"Consequently, buyers in Tamil Nadu operate only if there is a confirmed order from their principal buyers who are based in other States. We have recommended that the commercial tax department adopt a tax structure similar to that of North India,'' TAASI representatives told Business Line.

If the Government were to introduce a flat rate of two per cent on auction sales, the registered dealer (buyer-members) in the State will be able to source teas for any number of principle buyers as in the case of North Indian auction centres.

"Such a move would not deprive the state exchequer of any monies as the tax paid by the trader will be at value added price,'' a TAASI official said.

The association has also sought to clarify its position as auctioneers and not as dealers.

"The sales tax authorities had issued notices some time back to a few of us proposing to levy AST at the rate of one per cent since our taxable turnover has exceeded the specified limit of Rs 10 crore. However, we would like to point out that we act only as agents and sell the teas in the auctions on behalf of the sellers,'' a TAASI representative reasoned.

According to them, payment from the buyers received within the stipulated time, as per the rules of the Tea Trade Association, is remitted to the sellers after deducting the commission.

"Hence auctioneers cannot be classified as dealers in the true sense. Consequently we should not be made liable to pay AST on the aggregate taxable turnover of goods sold through us by various principals, whose individual taxable turnover does not exceed Rs 10 crore,'' they argued.

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