What is KitKat?- “A chocolate!" Isn't it the obvious answer that comes to your mind when you hear the name? But that's not the case we are going to talk about. Rather, it's about the time when KitKat wasn't a chocolate, but a biscuit. Yep, you heard it right.
It's about 1999 when Mumbai High court called Nestle Kitkat to it's door. It was one of the consequences of goods and services Tax (GST) over the classification of various products. It was the time to determine the slab relevant to the products so that the GST could be levied accordingly. The trouble began for Nestle when it categorised KitKat as a biscuit, not a chocolate.
A product might have an identity in itself and they are produced and sold with a purpose to serve to it's consumers. But those products also have a secondary identity which reflects through the way we use it. That creates the value of the product on which this tax is imposed.
A lot of these questions appeared in the court regarding the classification of KitKat, revealing the intricacy of the popular food product in the market. It involves the fact that they are made with elements that can have numerous uses as food, cosmetics, Medicine or even in industries. For instance, we bring oranges and eat it as a food. If we wish, we can make juice out of it and drink. But when we buy that same juice ready-made from the market, that's not a fruit, but a fruit juice. Makes sense? The tax levied on fruit juice would be higher than that of the fruit itself. For obvious reasons like addition of extra flavours, ingredients, processing and all that packaging and stuff. As fruits are considered as basic, but packed juices, that can be made out of the fruit itself is considered a luxury.
In the Nestle (India) Ltd vs the Commissioner of Central Excise Mumbai, the Favor went in Nestle's side it stated KitKat as a biscuit and not a chocolate. You know what that means right? It simply means less tax burden on the manufacturer. Though it had to face consequences later, it still won as it underlined “while all chocolates must necessarily contain cocoa, it is not every cocoa product or preparation that is chocolate.” So that's it. KitKat is therefore a chocolate coated bar, but not chocolate. What do you guys think?
