Tea auctions suspended

By Our Special Correspondent

KOCHI, JULY 31. The Cochin tea auctions (both leaf and dust) were suspended here today due to the `ambiguity' in the rates of sales tax.

A joint statement by the UPASI, Association of Planters of Kerala and the Tea Trade Association alleged that the Government had not issued notification regarding the extension of concessional rates of sales tax for tea sold in the Cochin auctions as announced by the former Finance Minister in the February 23 budget speech.

It is said that tea auctions till now had been conducted on this concessional rates of sales tax.

The tea trade had submitted memoranda to the Government last week drawing its attention to this issue requesting the Government to issue notification to this effect. The introduction of turnover tax has `worsened' the situation further.

The rate of commission charged by tea brokers is one per cent as stipulated by the Tea Board and the tea auction buyers operate at a rate of one to 1.5 per cent and the net profit was `just 0.25 per cent only' claims the trade. Since there was an ambiguity in the applicability in the rate of sales tax, it was not possible to conduct the tea auctions at this juncture. The Cochin Auction Centre has offerings valued at Rs. 5.43 crores during this week for sale, it is said.

The advantages of the auction system are its transparent nature and it ensures that 100 per cent tax is collected and remitted to the Government without any evasion.

The statement pointed out that Tamil Nadu which had introduced reduced sales tax had already extended the reduced sales tax up to December 1 for teas sold at Coimbatore and Coonoor auction centres.

This, coupled with the introduction of the turnover tax and an additional sales tax by the State Government, would lead to the diversion of tea to auction centres at Coimbatore and Coonoor, the tea trade feared.

The tea industry is said to be going through one of the worst ever financial crises due to low price realisation and high cost of production.

The situation is so bad that the companies were finding it extremely difficult to pay the wages and other related benefits to the workers employed in the plantations.

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Section  : Southern States
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