Supreme Court Declares Coconut Oil as Edible Oil, Resolves 15-Year Taxation Debate

(Source: Indian Express; Section: Explained; Page: 12)

Topic: GS2 – Governance

Context:

The Supreme Court of India resolved a 15-year debate by classifying coconut oil as an edible oil for taxation purposes. This decision ensures a lower tax rate (5% under GST) compared to the higher rate (18%) applied to haircare products.

Analysis of News:   

Taxation Evolution of Coconut Oil

• Under the pre-GST regime, coconut oil was taxed at 8% as an edible oil, in alignment with international Harmonized System of Nomenclature (HSN) norms.
• In 2009, a circular reclassified coconut oil in small containers as hair oil, subjecting it to a higher 16% tax.
• This circular was withdrawn in 2015 after tribunal rulings confirmed that packaging size alone doesn’t dictate its use.
• With GST’s introduction in 2017, the debate re-emerged, with smaller packs often presumed to be for cosmetic use.

Legal Challenges and Tribunal Rulings

• Several manufacturers faced higher tax demands, leading to appeals before tribunals like the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT).
• These tribunals upheld that coconut oil is an edible product, irrespective of container size.
• However, the rulings were contested by the Central Excise authorities, bringing the matter to the Supreme Court.

Supreme Court’s Landmark Decision

• The Supreme Court rejected the “common parlance test,” which associates product use with market perception, stating it is applicable only when legal definitions are unclear.
• It ruled that container size cannot solely determine classification. The court emphasized adherence to specific legal provisions and HSN norms, clarifying that multipurpose use, such as for hair or cooking, does not exclude coconut oil from being categorized as edible.

Significance of the Ruling

• The verdict harmonizes classification practices under GST, providing clarity for manufacturers and consumers.
• It prevents arbitrary tax impositions and underscores the importance of legal definitions over subjective interpretations.

Harmonized System of Nomenclature Code (HSN)

It is a six-digit identification code. Of the six digits, the first two denote the HS Chapter, the next two give the HS heading, and the last two give the HS subheading. It helps in systematic classification of goods across the globe. It was developed by the World Customs Organization (WCO) and it came into effect from 1988. India has been a member of the WCO (World Customs Organization) since 1971. Also called the “universal economic language” for goods.

Practice Question:  Examine the significance of the Supreme Court’s recent ruling on the classification of coconut oil as an edible oil for taxation purposes. How does this decision impact the GST regime and the broader legal framework for goods classification? (150 words/10 m)

PRELIMS FACTS

1. India and France Collaborate to Transform North and South Blocks into World’s Largest Museum

(Source: Indian Express; Section: Govt & Politics; Page: 07)

Context:

India and France have signed an agreement to repurpose the North and South Blocks into a national museum under the Central Vista Redevelopment Project. Spanning 1.55 lakh square meters, this museum aims to surpass The Louvre in Paris as the world’s largest. The project will retain the heritage character of the buildings, with the North Block’s retrofitting scheduled to complete by June 2026.

Analysis of News:                                          

Phased Implementation and Collaboration

• The museum’s development is divided into two phases, starting with the North Block.
• The project includes a comprehensive feasibility study in collaboration with France Museums Development, incorporating global best practices in heritage preservation and museum design.
• France’s expertise, particularly from the Grand Louvre, is instrumental in shaping the adaptive reuse strategy.

Transition of Government Offices

• As part of the Central Vista Plan, the North and South Blocks, currently hosting key government offices like the Ministries of Finance, Home Affairs, and the Prime Minister’s Office, will shift to the Common Central Secretariat buildings on Janpath.
• The North Block will likely be vacated by March 2025, with the South Block following thereafter.

Significance of the Project

• This initiative not only showcases India’s commitment to preserving and repurposing heritage structures but also highlights the strengthening cultural partnership with France.
• The project aims to create a global cultural landmark while ensuring the seamless transition of critical government functions.

2. Centre reimposes Protected Area Regime in 3 Northeastern states, including Manipur

(Source: Indian Express; Section: Express Network; Page: 11)

Context:

The Union Home Ministry has reimposed the Protected Area Regime (PAR) in Manipur, Mizoram, and Nagaland due to rising security concerns over foreign influx from neighboring countries. The decision highlights the government’s renewed focus on monitoring foreign movements and addressing security issues in these sensitive regions.

Analysis of News:   

What is the Protected Area Regime?

• The PAR is a set of regulations established under the Foreigners (Protected Areas) Order, 1958, which is aimed at regulating foreign visitors to areas that are considered strategically important or vulnerable to external threats, particularly in the northeastern states and other border regions of India.

Key Features of the PAR: 

Restricted Access: Foreigners are not allowed to visit areas under the PAR without prior government approval. 

• To enter these areas, they must apply for and obtain a Protected Area Permit (PAP), which allows authorities to monitor the movement of foreign nationals in sensitive regions.
• The areas covered by the PAR are deemed sensitive due to their proximity to international borders or because of ethnic tensions, insurgency, or political instability. 

Relaxations and Reimposition:

• In the past, there have been temporary relaxations to encourage tourism in some regions, like in Manipur, Mizoram, and Nagaland, where the PAR was relaxed in 2010 for promoting tourism. 
• However, such relaxations were reversed when security concerns arose, as seen with the recent reimposition of the PAR in these states.

3. Scotch Tape Sparks Breakthrough: Scientists Create Ultra-Thin Diamond Films with Revolutionary Potential

(Source: Indian Express; Section: Explained; Page: 12)

Context:

Originally invented in 1930 as a simple solution for wrapping presents, Scotch tape has found an extraordinary new application. Scientists have utilized it to create ultra-thin diamond films, a breakthrough reported in the journal Nature. This unexpected innovation may pave the way for advancements in microelectronics and quantum devices.

Analysis of News:                         

A Fortunate Accident Sparks Discovery

• The method, described as “simple, scalable, and reliable,” was discovered accidentally by Jing Jixiang, an electrical engineer at the University of Hong Kong.
• While working with Scotch tape, he inadvertently peeled a layer of diamond from a silicon wafer.
• This prompted further experiments involving chemical vapor deposition (CVD), where methane gas was used to grow thin diamond sheets.
• The challenge of extracting these layers was resolved by carefully applying and dissolving Scotch tape.

Desirable Qualities of Diamond Films

• The ultra-thin diamond films are highly desirable due to their unique properties.
• They are smooth, flexible, and compatible with micromanufacturing techniques, offering opportunities for elastic strain engineering and deformation sensing.
• Diamond’s unique electronic properties, such as insulating capabilities and energy-efficient electron transport, position it as a potential alternative to silicon in semiconductor applications.

Potential Applications and Promise

• The breakthrough enables scalable production of freestanding diamond films, which could revolutionize chip design, particularly in quantum computing and advanced sensors.
• According to experts, this technique offers unprecedented control in quantum devices and expands possibilities for future device designs.

4. China, Nepal launch global dialogue series

(Source: Indian Express; Section: The World; Page: 14)

Context:

Nepal and China have launched the “Phewa Dialogue,” a two-day event aimed at fostering regional prosperity and peace. Held in Pokhara, the dialogue is named after the iconic Phewa Lake and was inaugurated by Nepal’s former President Bidya Devi Bhandari.

Analysis of News:                                                                                                                 

Academic Collaboration

• The initiative is jointly hosted by Sichuan University’s China Center for South Asian Studies and Tribhuvan University’s Department of International Relations and Diplomacy.
• This collaboration underscores the role of academic institutions in shaping policy discussions on South Asia’s industrial and economic dynamics.

Focus on South Asia’s Economic Integration

• The Phewa Dialogue aims to address key issues such as South Asia’s global industrial shifts and the region’s economic integration.
• The event aspires to position itself alongside global forums like China’s Boao Forum and Singapore’s Shangri-La Dialogue, as emphasized by China’s Ambassador to Nepal, Chen Song.

Significance for Nepal

• The Phewa Dialogue marks Nepal’s entry into the realm of world-class think tank forums, providing a platform for South Asia to engage in economic and strategic discourse.
• It is a significant step towards promoting regional cooperation and elevating Nepal’s role in international policymaking.