Setback to Amway: Delhi HC rules Coconut Oil Sold as Hair Oil, not classifiable as Edible Oil under DVAT Act [Read Order]

In a major setback to Amway India Enterprises Private Limited, the Delhi High Court ruled that the coconut oil sold as hair oil, not classifiable as edible oil under the Delhi Value Added Tax Act, 2004 (DVAT Act).

The appellant, Amway India Enterprises Private Limited, has filed the present appeal under Section 81 of the Delhi Value Added Tax Act, 2004, impugning the judgment dated 18.08.2021, passed by the Appellate Tribunal, Delhi Value Added Tax.

It was the case of the appellant that the coconut oil, being sold by it, was rightly classified under Entry No. 25 of the Third Schedule appended to DVAT Act as ‘Edible Oils and Oil cake’, whereas as per the Revenue, the same is to be classified as a residuary item under Section 4(1)(e) of the DVAT Act.

The DVAT Tribunal by the impugned judgment upheld the order of the Additional Commissioner, OHA, to the extent of taxability of Amagram periodicals at 5% and Coconut Oil at 12.5%. The DVAT Tribunal also set aside the findings of the learned Additional Commissioner with respect to Olive Pomace Oil on account of lack of corroboratory material on record.

The counsel for the appellant submitted that the product is labelled as Persona coconut oil 100% pure edible oil. The reason that the product is capable of multiusage, cannot be a ground for classifying it under a residuary entry when the product is admittedly an edible oil for which a specific entry has been provided. The Act does not prescribe any entry for hair oil. Coconut oil is edible oil, and therefore, cannot be put as a residuary item because the same is used as hair oil.

A Division Bench comprising Justices Amit Mahajan and Vibhu Bakhru observed that “Thus, in view of the admitted fact that the coconut oil is sold by the appellant in small packs; is displayed in the category of hair care; the manner in which it is to applied on hair; and the purpose for which it is purchased by the consumer leaves no manner of doubt that the coconut oil sold by the appellant is wrongly sought to be classified under Entry 25 of the Third Schedule of the DVAT Act.”

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