20 months into contention the fate of Paratha on GST finally was grounded two days back. Over these many months, in the widespread debates, those for and against the move presented their share of ideas on what should be the rate at Paratha needs to be labeled.
Whether ready-to-eat Paratha should incur the GST equal to Roti or not? Both are made of wheat flour and thus uses are also the same, while others batted for an increment from 5% pitching their share of the idea saying Paratha is not the same as roti.
As per the Gujarat-based Appellate Authority of Advance Ruling, roti will have 5%, whereas Paratha will be labeled with 18% of GST.
While producing the ruling the authority was of the view that half of Paratha consists of flour while it also has other vegetables such as Potato, Radish, Onion, and vegetable oil, besides consisting of salt.
While Roti just has flour and water thus two are not the same. Well, it is not the first time we are observing this kind of battle over ingredients contained in the eateries.
History is evident in some of these cases that we have seen over the years, here are some famous examples of the battle of taxes over categorization:
Case 1: Is Sachin Tendulkar an Actor or Cricketer?
The controversy dates back to the year 2011. Sachin Tendulkar earned Rs 5.92 crore from ESPN Star Sports, PepsiCo, and Visa companies.
He claimed an exemption of Rs 1.77 crore under section 80RR of the IT Act. Under 80RR, if a sportsperson, artist, or writer earns from abroad through his work, then a part of that amount can be tax exempted.
Sachin got these earnings in lieu of advertising and sponsorship, and not from playing cricket. Therefore, the tax authority raised questions on whether this exemption comes under the purview of 80RR.
While Cricket’s one of the all-time greats Sachin Tendulkar clearly said that his main profession for this income is not playing cricket but acting.
Since actors also get an exemption under 80RR, he should also get an exemption. Simply put, Sachin told his main profession to be acting and not playing cricket.
The tribunal in its verdict held that while doing advertisements, Sachin had to face the light and the camera. It requires imagination and creativity, which has an impact on common people.
Even though he has built his brand value as a cricketer, his actions cannot be denied. Eventually, the tax authority accepted Sachin's claim of 'actor' and he was given tax exemption under section 80RR.
Case 2: Whether Coconut Oil is edible or for hair?
The controversy is linked to Parachute Coconut Oil a well-known brand of the Marico Company. The company had placed this flagship product in the category of edible oil, due to which it has to pay less excise duty, which saw an objection from the tax authority.
The tax authority said that people usually use this oil for hair. Therefore, it should be kept in the category of cosmetic hair oil and an 8% excise duty should be charged.
The company said that they do not write anywhere in their pack that it is hair oil. Even in advertisements, only its quality and purity are talked about. It is certified as edible oil by FSSAI. Now the company cannot be responsible for how people use it.
The tribunal found that Parachute Coconut Oil is not sold anywhere with the claim of hair oil. Its ingredient is also usable as edible oil.
Just because people use this as hair oil it does not become hair oil. The Tribunal allowed Parachute Coconut Oil to be classified as edible oil. Later the company launched Parachute Advanced, which was placed in the category of hair oil.
Case-3: Is Dabur's Lal Dant Manjan Tooth Powder or Ayurvedic Medicine?
Dabur ‘Lal Dant Manjan’ is a very popular product. The company had placed it in the category of Ayurvedic medicine instead of cosmetic. The rate of excise duty was lower in this category.
The tax authority challenged this saying that it is a tooth powder that is used for cleaning teeth. It does not cure any disease and does not require any separate drug license to sell it.
While Dabur said that Ayurvedic ingredients have been found in it. People use it for dental care. Therefore, it should be kept in the category of Ayurvedic medicine.
In 2003, the Odisha High Court, while ruling on Dabur's petition, upheld the arguments of the tax authority. The court said that under the Drugs and Cosmetics Act, Lal Dant Manjan does not fulfill the necessary conditions for being included in the category of medicine anywhere.
It does not cure any disease. Its advertisement has also been said to keep the gums healthy and remove the smell of the mouth. Therefore, Dabur Lal Dant Manjan should be considered toothpowder and not Ayurvedic medicine.
Case 4: Is KitKat a chocolate or biscuit?
The controversy dates to 1999. Nestle wanted to keep its product KitKat in the biscuit category, as it would attract a 10 percent tax. The tax authority believed that it is chocolate and that a 20% tax should be charged to it.
Eventually, the matter reached the Mumbai Tax, Excise, and Gold Tribunal. The tribunal was to decide whether the KitKat biscuits had a chocolate coating or whether the biscuit was kept inside the chocolate.
While Nestle was of the view we don’t sell it labeled as chocolate. People buy it as a mixture of biscuits and chocolate. At the same time, the tax authority believed that 68-70% of chocolate is milk in it, so it should be considered as chocolate.
The tribunal in its ruling said, “…while all chocolate must necessarily contain cocoa, it is not every cocoa product or preparation that is chocolate”.
That is, it is necessary to have cocoa in the chocolate, but it is not necessary that all cocoa be chocolate. Eventually, KitKat was considered a biscuit and was kept in the 10 percent tax category.