HC Remits GST Show Cause Notice Against Marico on Coconut Oil Classification After Supreme Court Ruling

Marico Limited approached the High Court challenging a Show Cause Notice issued by the GST authorities for the FY 2017–2020. The notice proposed substantial tax demands, the primary component being Rs 374.32 crore on the allegation that “Coconut Oil” sold in retail packs was wrongly classified under Tariff Heading 1513 instead of Heading 3305, resulting in short payment of GST.

At the time of issuance of the show cause notice, the issue of classification of coconut oil was pending before the Supreme Court in Commissioner of Central Excise, Salem v. M/s. Madhan Agro Industries (India) Private Limited. The Supreme Court later delivered its judgment clarifying the legal position on classification of coconut oil under the Central Excise Tariff.

Main Issue: Whether the impugned GST show cause notice relating to the classification of coconut oil and other input tax credit issues should be quashed or reconsidered in light of the Supreme Court’s authoritative ruling on classification.

HC’s Order: The Hon’ble High Court noted that the Supreme Court had settled the controversy concerning classification of coconut oil. The Apex Court held that pure coconut oil sold as edible oil would fall under Heading 1513 unless the packaging satisfies the specific requirements of Chapter Note 3 to Chapter 33, in which case it would be classifiable as hair oil under Heading 3305.

The HC deemed it appropriate to remit the matter back to the GST authority. The respondent was directed to pass a fresh order on merits, taking into account the Supreme Court’s decision as well as the other issues raised in the show cause notice. The writ petition was disposed of accordingly without costs.

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