SC classifies small bottles of coconut oil as edible; to be taxed at 5% GST
In relief to fast moving consumer goods (FMCG) players such as Marico and Bajaj Consumer, the Supreme Court on Wednesday ruled in a 15-year-old dispute that small bottles of coconut oil should be classified as edible oil and taxed at 5%, rejecting the tax department’s demand to classify the oil as hair oil and tax it at 18%. Goods and services tax (GST) on edible oil is set at 5% while hair oil is taxed at 18%.
The court, however, clarified that if coconut oil is packaged in small bottles and labelled as hair oil, it should be classified as hair oil under the Central Excise Tariff Act, 1985
This decision came as a relief for both manufacturers and consumers, as prices of edible coconut oil could have increased if it was classified as hair oil.
The Supreme Court's three-judge bench of Chief Justice Sanjiv Khanna and Justices Sanjay Kumar and R Mahadevan, had reserved the judgement on October 17 in this case.
