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Tea Board wants service tax notice to Coonoor warehouses withdrawn
December, 23rd 2011

Tea Board members from the South have urged the Central Excise Department not to levy service tax on the tea stored in warehouses in Coonoor.

Recently, the Coonoor office of the Central Excise issued notices to some 14 warehouses for collecting service tax on the teas stored by them for Coonoor auctions. As this is a new development and warehouses in no other auction centre in the country have received such notices, warehouses in Coonoor have made representations not to levy service tax.

In pursuance of this, Tea Board members from the South have urged the department to drop the levy. I have represented to the Chief Commissioner of Central Excise and Service Tax, Chennai to instruct his Coonoor office to refrain from pursuing the notice. The tea stored in warehouse is the same tea defined by the Tea Act, 1953, viz., the plant Camellia Sinesis, including its varieties, and being an agricultural produce, is exempt from service tax, Mr P. Viswanathan, Tea Board member representing the Lok Sabha, told Business Line.


The Service Tax (Removal of Difficulty) Order, 2002, specifically exempts tea. So, Coonoor excise office's contention is untenable, contended Mr Koshy Baby, Board member representing small growers.

To make the harvested green tea leaf marketable, the moisture has to be extracted because over 80 per cent of green leaf contains moisture. That is what is done in factories and no new product emerges or derived from another manufactured product.

The Supreme Court has also accepted that tea is not a manufactured product. Hence, it cannot suffer service tax at warehouses, observed Dr S. Ramu, Tea Board member representing factory owners.

We are taking up this issue at the Tea Board meeting scheduled for December 29 to urge the Commerce Minister press the matter with the Finance Minister, he said.

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