Circular No. 74/2018 issued on 05.11.2018 clarifies the applicability of TCS provisions under section 52 to Tea Board of India.
Tea Board operates the electronic auction system for trading of tea across the country and falls under the category of e-commerce operator liable to collect TCS as per section 52. The tea producers (sellers) and auctioneers who carry out auction on behalf of such sellers and buyers are the participants in this auction.
Buyers make payment of a consolidated amount to an escrow account maintained by the Tea Board towards value of tea, selling and buying brokerages charged by auctioneers and the amount charged by the Tea Board from sellers, auctioneers and buyers. Out of escrow account, Tea Board pays value of tea to sellers and brokerage to auctioneers.
The Circular has clarified that TCS has to be collected at the notified rate from the tea producers on net value of tea and from auctioneers on net value of brokerage.