The Guwahati Tea Auction Centre (GTAC) has violated the Tea Marketing Control Order (TMCO) by engaging in private mode of selling tea within the premises of the auction centre, according to Tea Board sources.
The Tea Board in a recent directive on Private mode of sale through auction centres has observed that a considerable percentage of tea was being sold through private sale "contradicting the responsibility of auction organiser as promulgated in TMCO, 2003," sources said today.
Comments from GTAC were not immediately available.
The Tea Board directed that auction centres refrain from engaging in such practices of selling teas.
GTAC sold 16,30,62,509.10 kg from January to December 2013 out of which 12,66,33610.9 kg were sold through 'auction mode' and 3,64,28,898.2 kg were sold through 'private mode' of GTAC, according to the date available with North Eastern Tea Association (NETA).
Therefore, 22.3 per cent of tea in GTAC was sold through private mode in 2013, sources said.
This is mainly due to the very low difference in VAT rates for selling tea through 'auction' mode and 'private' mode at GTAC, they added.
The VAT in Assam for selling teas through auction mode was 0.5 per cent and private mode was one per cent and due to this low difference of 0.5 per cent, large quantities of tea are being sold through private mode at GTAC, according to the Tea Board.
The VAT in West Bengal for selling tea through "auction mode" and "private mode" of tea auction centres (Kolkata and Siliguri) are one per cent and five per cent respectively and due to the four per cent difference in VAT, very small quantities of teas are sold through 'private mode' at Kolkata and Siliguri auction centres, Tea Board sources said.
NETA Chairman Bidyanand Barkakoty said there is no competition within the buyers in "private mode of sale through auction centres" and hence it is against the basic principle of auctioning.
Besides, private mode of sale is not transparent and due to purchase of large quantities of tea through 'private mode' at GTAC by the big buyers, the competition is less in "auction mode", thereby affecting the price realisation.
Since "private mode" of sale through auction centres is not "public auctioning", therefore it is a gross violation of TMCO 2003, he said.
