Commercial parlance determines tax classification where processed groundnut protein flour is treated as a distinct taxable commodity.

Applying the commercial parlance principle, the SC treated groundnut protein flour as a commercially distinct product from deoiled cake for sales tax purposes. The product had undergone further grinding, heat and steam treatment, with colouring or flavouring, and was found fit for human consumption; its trade identity, use, market understanding and price differed from deoiled cake, which was meant for animal feed. The Court rejected the argument that shared ingredients or continued processing prevent a new taxable commodity from emerging. Groundnut protein flour was therefore outside entry 29 as deoiled cake and was taxable as a separate commodity.

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Issues: Whether groundnut protein flour is the same commodity as deoiled cake for the purpose of entry 29 of the First Schedule to the Andhra Pradesh General Sales Tax Act, 1957, and whether it is taxable as deoiled cake or as a distinct commercial commodity.

Analysis: The product emerged after a further process of grinding, heat and steam treatment, and addition of colouring or flavouring agents, and was found to be an edible flour fit for human consumption. The Court applied the commercial parlance principle and held that sales tax is levied on distinct commercial commodities, not on the underlying substance from which they are manufactured. Although the earlier and later products shared some common ingredients, their use, purpose, market identity and price were different. Groundnut protein flour was commercially understood as a separate product from deoiled cake meant for animal feed. The reasoning rejected the contention that common ingredients or continuity of processing by themselves prevent emergence of a new taxable commodity.

Conclusion: Groundnut protein flour is not deoiled cake and is a distinct taxable commodity. It falls outside entry 29 as deoiled cake and is exigible to tax as such under the CST regime.

Final Conclusion: The assessee's challenge failed, and the revenue's classification of groundnut protein flour as a separate taxable commodity was upheld.

Ratio Decidendi: For sales tax purposes, a product that emerges from processing as a commercially distinct commodity, known in trade by a different identity, use and market understanding, is separately taxable even if derived from the same material and even if some constituents remain common.

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