What are some interesting case laws regarding indirect tax in india?

What are some interesting case laws regarding indirect tax in india? by @palkeshasawa

Answer by Palkesh Asawa:

There are many, but this one comes to mind. We are all aware of Parachute Coconut Oil. It’s perhaps the most famous hair oil used since several generations in many Indian families. Here is a photo that will remind you of many memories:

Did you notice that the bottle does not write “hair oil” on it?

It just writes “coconut oil”, even though majority of consumers use it like a hair oil. Actually –

  1. Coconut oil is an edible product, and it was not liable for excise duty.
  2. Hair oil is a cosmetic product, and it is liable for excise duty.

Tell me, is Parachute Oil an edible product or a cosmetic product?


For years, the government and the company have been fighting over it. The government said that this product is a cosmetic item and therefore should be liable for tax. As a counter, the company (Marico) said that the packaging does not mention this product as a hair oil and is actually intended to be used as an edible item.

Even today, look at this page  [1]from their website, which talks about their brand as a “coconut oil” and does not even once mention that it is useful for your hair. In fact, look at their commercial which talks about everything in the coconut oil, including the “purity” and “strength” of the oil, but not it’s application for hair care. You can see it here –

https://www.youtube.com/watch?v=Fih93HMKq3o


Notice also that the company is branding it’s other products specifically for hair application. For example, they have the brand of “Parachute Advansed” [2] which covers a range of hair care products. Here is a photo of their other brand –

See that this product clearly brands it as a “hair oil”. In fact, it even shows the beautiful hair of the actress to reiterate the fact.

This answer is about the first one – Parachute Coconut Oil – the simplest and best selling product of Marico, which does not mention that it’s a hair oil.


So when the Government claimed that parachute coconut oil is in fact a hair oil (which, by the way, for all practical purposes, it is); the company refuted the claim by saying that it is neither branded nor marketed as a hair oil. And the company is not accountable for how the consumers are actually using it.

The Government further raised a question that if indeed the coconut oil was an edible product, then why would the company package it in sachets, such as these –

I mean, who uses cooking oils in such small packets? The government therefore wanted to prove that the product is indeed intended to be sold as a hair oil.

In response to this, the company said that such smaller packing was useful for students and other such people who wanted to use the cooking oil for small purposes and not store it. And in this whole case, the company was constantly avoiding the payment of tax on a product which was obviously used as hair oil in most of the country.


What happened then?

The government came out with a simple solution: they changed the law!

New law said that any coconut oil with a packaging lesser than 200 ml would be treated as a cosmetic product [3]; and any size above that would be treated as an edible item.

This circular affected the company a lot, since a big portion of their sales was in the below 200 ml segment, which was now liable for tax. Obviously, the company decided to appeal against this circular to the higher authorities. [4]

There were a lot of cases in the Tribunal and also the courts, which said that merely because the packing is smaller, it cannot be classified as a hair oil. In view of the same, the Government then withdrew that circular. [5], and we are back in the game!


I like this case because it is a landmark dispute about how things should be classified. In accounting, we have this concept of “substance over form” – which says that outside appearance can often be misleading and therefore we must look into the reality and then take a call. In case of the coconut oil, the reality was that it was widely used as a cosmetic product, and it was only the outside appearance which deceived everyone.

Well, legal hassles can often be interesting!


EDIT

Some comments are interesting.

  1. Check out this comment from Anil Kumar where we discuss that Parachute Coconut Oil even has an FSSAI approval, which is necessary for edible products, and this comment from Anand Rajamani who points out that it also has the green vegetarian symbol on it.
  2. Rupesh Jain has commented that a similar case is applicable in case of Vicco turmeric cream, where the dispute is whether it should be taxable like all cosmetic creams, or whether it should be exempt like ayurvedic products!
  3. This comment from Vani Devraj also helps us to notice that Saffola cooking oil – made by the same company (Marico) is much different in packing than Parachute, even though both are claimed to be cooking oils.

See, this is a cooking oil –

It is also made by Marico, the same company that makes Parachute Oil. And notice how different the packing is. Parachute Oil is designed to discharge one drop at a time; do you really think that Coconut Oil is meant for cooking only?

Footnotes

[1] Marico Limited

[2] Marico Limited

[3] Marico may move court on CBEC circular, Dabur likely to follow suit

[4] Marico gears up for excise battle | Latest News & Updates at Daily News & Analysis

[5] http://pdicai.org/docs/Circular_…

What are some interesting case laws regarding indirect tax in india?

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What (trivial) knowledge might save your life one day?

What (trivial) knowledge might save your life one day? by Cal DeBouvre

Answer by Cal DeBouvre:

Downed power lines are 100 percent lethal. Do NOT approach them. Even walking near a downed line can electrocute you because the voltages are high enough to push electricity through the dirt nearby. If you spot a downed power line walk the other way and call the police immediately.

Now what do you do if a power line falls down near you? Immediately stop moving. Jump straight in the air and land with your feet together. Continue jumping away from the line, keeping your feet together, until you're at least 50' away (since it's been mentioned several times in the comments, an alternative method: you can also shuffle away, without lifting your feet and only moving them a few inches at a time.)

You do this because of a concept known as step potential, where one point on the ground is at a higher voltage than another. If you walk normally, your left foot may be several hundred volts higher than your right which would cause electric current to flow through your body and kill you. Keeping your feet together keeps them at the same electrical potential and prevents current from flowing.

Stay away from electrical wiring and equipment. Power lines, electrical panels, substations, and third rails can and will kill you.

(Image credits: Sumter County FL, EPCOR)

What (trivial) knowledge might save your life one day?

What are the rules in the “bro code”?

What are the rules in the "bro code"? by Jake Williams

Answer by Jake Williams:

I see most of these answers give a bro code made by another website. I'm going to have a shot at writing my own bro code.

Firstly, let's define bro. Bro- noun- any person, male or female, who has proven themselves to be an utter ledge.

Now that that's out of the way, let's begin with the official rules of the Jake Williams bro code.

  1. If a bro asks the question ‘Pub?’ the only acceptable response is ‘Pub.’
  2. If a bro needs any amount of money less than a tenner, you give the money, you don't lend it.
  3. Any bro may take the last beer without judgement. Any bro may also take the last slice without judgement. Any bro who takes the last beer and the last slice can be shot.
  4. Bros don't let bros drive drunk nor walk home alone.
  5. If a bro says ‘hold my beer’ you must immediately hold the beer and pay attention to anything and everything that might be about to happen.
  6. The mothers off all bros are automatically off limits to banter. Exception- recognised ‘yo mama’ jokes and ‘that's not what she said’, these are understood to not be said with the bros actual mother in mind.
  7. If a bro overreacts to something, does something stupid, or otherwise makes a twat of him or herself, then they will have the piss taken out of them. No exceptions.
  8. If a bro doesn't ask your opinion, you will give it anyway. That's how we help our bros improve themselves.
  9. A bro is given 120 seconds to tell a story, any longer and you are not under obligation to listen. Exception- if a bro got into bed with a celebrity, you will listen to them for a full 72 hours.
  10. You only get one chance to recognise a new haircut, and one opportunity to take the piss out of it.
  11. Any dispute between bros may last 48 hours. After that, all bros involved are expected to drop it.
  12. If a bro starts a fight, you are obligated to watch. If a bro does not start a fight, but gets into one anyway, you are obligated to assist. No exceptions.
  13. If you lend money to a bro, you shouldn't ask them to give it back. If a bro lends you money, you should give it back without them asking. Exception- see rule 2
  14. When telling a story about a bros great deeds, you will make him or her sound their best. The 20lbs salmon weighed 30lbs, there wasn't one guy there were two, they finished the marathon in 3:45.
  15. A bro will bail a bro out of jail. A good bro will be sitting in the cell next to them saying ‘that was fucking awesome!’

What are the rules in the "bro code"?

Astronauts: What negative things do you see looking at Earth from space?

Astronauts: What negative things do you see looking at Earth from space? by Robert Frost

Answer by Robert Frost:

Terrorist Attacks (e.g. The World Trade Center burning)

Hurricanes Striking Your Home and Family (e.g. Hurricane Ike)

Flooding (e.g. Biloxi after Hurricane Katrina)

Forest Fires (e.g. Montana)

Slash-and-burn Forest Clearing (e.g. Brazil)

Volcanoes Erupting (e.g. Mt. Etna)

Oil Spills (e.g. Deepwater Horizon off the coast of Louisiana)

Mining (e.g. Utah)

Lightning

Astronauts: What negative things do you see looking at Earth from space?

Why does Lamborghini make the best looking sports cars?

Why does Lamborghini make the best looking sports cars? by Danyon Rabold

Answer by Danyon Rabold:

They don't. They make the best looking sports cars in your opinion.

If I were to personify Lamborghini, I’d compare it to an American Football running back. They're powerful and have a certain sturdiness to their look.

I’d compare Ferrari to an assassin. They're sleek, nimble, and will fly by right when you let your guard down.

Pagani would have to be the computer nerd. Organized chaos of gauges and doodads flood this car, but the brain behind this car still makes sense of it all.

Koenigsegg is that one guy who nobody really knows, until his friends urge him to run a foot race with you, and all you see is the back of his head the whole race.

Bugatti is the rich kid, who has been given all the opportunities necessary to be the best in the world. Somehow, they lack a personality, and instead rely on their innate greatness to keep them relevant.


You see, look is more about the image projected. You just so happen to personally like Lamborghini. That's an opinion, not fact.

Why does Lamborghini make the best looking sports cars?