Source: http://www.bloomberg.com
July 4, 2008 Author: By James Lumley
July 4 (Bloomberg) -- Pringles, Procter & Gamble Co.'s salty snack stacked in a tube, are not potato chips, a London judge ruled today in a tax dispute.
Pringles don't fulfill the legal definition of ``potato crisp,'' the British word for ``chip,'' allowing them to be sold tax free in the U.K., Justice Nicholas Warren at the High Court in London ruled.
Under U.K. law, most food is exempt from Britain's 17.5 percent sales tax. Even so, the national tax office claimed that Pringles were covered by an exception for products such as potato chips, sticks or puffs ``and similar products made from the potato, or from potato flour, or from potato starch.''
Procter & Gamble's lawyers claimed at a May hearing that Pringles don't look like a chip, don't feel like a chip, and don't taste like a chip, according to the judgment. They also claim the snack isn't made like a chip since it is cooked from baked dough, not potato slices.
Potato chips ``give a sharply crunchy sensation under the tooth and have to be broken down into jagged pieces when chewed,'' the Cincinnati-based company's lawyers argued. ``It is totally different with a Pringle, indeed a Pringle is designed to melt down on the tongue.''
Warren agreed. Pringles aren't ``made from the potato'' for the purposes of the tax office's exemption, he said. He didn't say what Pringles are, other than that they're tax-exempt.
The U.K. tax office said in an e-mailed statement that it would consider the judgment ``with a view to deciding whether to appeal.''
In a similar case in April the U.K. government was told by Europe's highest court, the European Court of Justice, to entirely refund Marks & Spencer Group Plc more than 20 years-of sales duty charged on chocolate-covered tea cakes.
Between 1971 and 1994 the tax office incorrectly classified them as biscuits, which are taxable, rather than cakes, which aren't.
