The Council’s Fitment Committee had recommended that coconut oil packaged and sold in containers of less than one liter should be classified as hair oil, and taxed at the rate of 18%.
The GST Council may have deferred a proposal to sell coconut oil in pack size less than a liter at 18% instead of 5% levied on edible oils, but industry observers are puzzled by the idea as the pre-GST tax regime Similar moves are underway. successfully challenged.
The Council’s Fitment Committee had recommended that coconut oil packaged and sold in containers of less than one liter should be classified as hair oil, and taxed at the rate of 18% levied on personal care items , while 5% GST may continue for the same oil. When sold in containers of one liter or more.
Tamil Nadu Finance Minister P. Thiagarajan had earlier Criticized the suggestion of the GST Fitment Committee One was created as ‘malicious’ against southern states with particularly adverse effects for poor consumers who may not be able to buy large quantities of oil.
In 2009, the erstwhile Central Board of Excise and Customs (CBEC) had issued a circular proposing to classify small coconut oil packs of up to 200 ml as hair oil, subject to an excise duty of 8% , while the larger pack was considered vegetable oil. There is no excise duty on them.
At that time, such small coconut oil packs accounted for almost a quarter of the business of FMCG player Marico, and issued the CBEC circular, while the Tribunal Bench held that coconut oil is a vegetable oil.
In a research note on the issue, JM Financial analysts Richard Liu and Vicky Punjabi said the move appears to reiterate the issue of ‘excise duty on small-packs’, which Marico has challenged in court in the past. Was and won. decision in his favor.
“We are not sure what would prompt the Council to revisit the issue, especially since the matter seemed to be well settled in court and on what should be the appropriate GST rates for different categories of goods. Even after long discussions. Before the implementation of GST in mid-2017,” the note said.
Such a tax rate structure is “very unlikely to be implemented”, analysts said, adding that the matter needs to be further examined from the perspective of impact on coconut farmers in the broader context of “protection of farmers’ interests”. has been
.