Is the reality exactly what we know and what we see?
The Irish Supreme Court ruled on Thursday that the bread sold by the fast-food giant “Subway” was simply not bread at all, and we need to talk about it.
You know, as long as the sugar content does not exceed 2 per cent of the total weight of flour, Irish laws demand that a portion of food be labelled as bread. But all of the bread choices for Subway contained ~10% sugar, thus breaching the legal concept.
The court then ruled, in essence, that the designation was unacceptable and that their bread was no longer excluded from Value Added Tax. This means that the bread of a corporation will no longer be regarded as a staple product and will be subject to appropriate tax rates as considered appropriate by the authorities.
We can cover this full-fledged story in another article alone, but for now, I figured out that it would be much better to look at related Indian events. So, I have listed down two such incidents/ explanations for you in this piece of writing, both highlighting classification issues and court decisions that have altered the act of doing business in India. For the most part, at least.
Scenario 1- When Parachute wasn’t what we know It is – “Hair Oil”
The Parachute name is legendary. And it is fair to assume that most people have learned of the coconut oil Parachute. But the fascinating bit is that the item is not advertised or sold as hair oil. Marico categorizes them as edible oil instead. The explanation is very clear. A low tax rate brings edible oil while the cosmetic hair products are charged at a higher cost. So, if you were a wise business owner, based on this little detail, you would prefer to identify the substance. But for this definition, the authorities did not agree.
They denied that they were told anything totally new from their consumer study. They figured that people who bought “coconut oil” in small packets used the substance mainly as hair oil. As such, they asked the tribunal not to identify the objects based on technological and science specifications (ruling on the matter), instead, depend on common opinion. Parachute oil is, after all, often referred to as hair oil in general parlance.
However, the tribunal objected. They felt that whilst you might use Parachute as hair oil, it was incumbent on the authority to show, beyond any reasonable doubt, that the substance was clearly prepared for hair use by means of product labels/literature/container indications. You can’t identify it as that, simply because certain individuals want to use the substance as hair oil. A strong nexus between the two must exist. And whilst Parachute commercials subliminally tend to suggest that you can use the item as hair oil, they don’t make this point directly. The packaging is also empty of any other contact. Instead, much of it, reflect on the goodness of coconut oil and the clear advantages for the human body.
So, the court was forced to side with Marico and it continued to identify Parachute oil as “edible oil.”
In fact, “Parachute Coconut oil contains no added chemicals, scent, additives or preservatives. It has a shelf life of up to 18 months and is licensed by FSSAI as an edible grade coconut oil.”
Interesting enough? Isn’t it?
Scenario 2 – When Sachin wasn’t what we know him – “A CRICKETER”
If you’ve ever filed taxes, you know that by claiming deductions you can save a whole lot of money. For instance, if such special requirements are fulfilled, there is a provision in the Income Tax Act that exempts revenue from international sources. Okay, let me elaborate and throw some light on why is this related to what we’re talking about.
Consider Section 80RR of the Income Tax Act. If you were a chosen professional, i.e., if you were an author, playwright, poet, singer, actress, or a sportsman and obtained revenue from a foreign source, if you gained this money when practising your career, then authorities would not tax the whole income. The aim of this circular was to encourage a greater awareness of overseas Indian culture and also shore up foreign exchange reserves. So, when Sachin Tendulkar, the legendary cricketer, claimed deductions on revenue received from commercials and sponsorship deals (like PepsiCo and Visa), you would think there would be no need to doubt his assertion.
After all, Sachin has done more for this country as a cricketer than other others. But……but…
There is one small argument. Visa and PepsiCo didn’t give him any money because he was playing cricket for them. They paid him for the advertisements with money. So, legally, while pursuing his career as a cricketer, Sachin was not making money. And thus, there was room for some uncertainty. But by mentioning that he was strictly an “actor” and not a “cricketer,” Sachin immediately explained this bit for the tax authorities.
That is right. Arguably, Sachin Tendulkar, the greatest batsman who ever existed, said that he was just a non-professional cricketer. And he showed that all money earned from playing cricket was listed in his tax returns as “Income from Other Sources” in an attempt to support his point. And that’s when it took a very surprising turn for matters.
The tax authorities protested that this was ridiculous. Who is a cricketer if Sachin is not a cricketer? “, the Assessing Officer argued. Their point was this—
In reality, in all of the advertisements or sponsorship activities, the appellant [Sachin] did not “act” or behave as an “artist” in the spirit of the terms. Really, all he has been doing is only “appearing” at these functions and advertisements. These operations, as discussed earlier, are at most “subsidiary” or “subsidiary” activities from which the claimant has generated revenue… The nature of his performance as an actress or an artist does not draw interested parties to pay him large sums of money. And if his performance is most usual, the payment is only made because of his “appearance” and not because he is an “Actor” or an “Artist.”
And thus, they claimed that there is no reason for him to demand deductions that by becoming an Actor. But with this finding, the tribunal adjudicating the case disagreed. They proclaimed—
“[Sachin] has to face the lights and camera when featuring in advertising and ads. The assessee brings a degree of ingenuity, innovation and ability to his work as a guide to combine elements in a way that will influence human senses and emotions and have an artistic value. No wonder, as a good cricketer, as a model, it has contributed to his brand worth. Yet the irony remains that the assessor needs to use his own talents, ingenuity and imagination. Every person or every sportsman does not have the degree of skill or potential or imagination and is facing the lights and camera, etc.”
And thus, based on Section 80RR, Sachin was permitted to maintain his status as an actor and demand deductions.