Ordinary commercial meaning governs tax classification of stencil paper, excluding it from the paper entry and higher rate.

Stencil paper is construed in its ordinary commercial sense for sales tax classification, because the entry for "paper" in serial No. 7-A has no special statutory definition. On that approach, a specialised duplicating material with a distinct composition and use is not covered by the term "paper" as used in the notification. The note further states that, once excluded from serial No. 7-A, stencil paper does not attract the higher rate attached to that entry and remains taxable at the general rate under the Orissa Sales Tax Act, 1947. The stated result is classification outside the ordinary paper entry and application of the lower rate.

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Issues: (i) Whether stencil paper falls within the expression "paper" in serial No. 7-A of the relevant sales tax notification. (ii) Whether sale of stencil paper is taxable at 7% or at 5% under the Orissa Sales Tax Act, 1947.

Issue (i): Whether stencil paper falls within the expression "paper" in serial No. 7-A of the relevant sales tax notification.

Analysis: The expression "paper" was held to have no special statutory definition and had therefore to be understood in its common and ordinary commercial sense. On that approach, stencil paper, having a distinct composition and use and being bought and sold as a special duplicating material rather than as ordinary paper, was not treated as paper in the ordinary sense. The cited entry covered ordinary paper and allied stationery articles, not stencil paper as such.

Conclusion: Stencil paper does not fall within the expression "paper" in serial No. 7-A.

Issue (ii): Whether sale of stencil paper is taxable at 7% or at 5% under the Orissa Sales Tax Act, 1947.

Analysis: Since stencil paper was excluded from serial No. 7-A, the higher rate of 7% prescribed for that entry could not apply. In the absence of inclusion in the specified higher-rated category, the commodity remained liable at the general rate under the Act.

Conclusion: Sale of stencil paper is taxable at 5% and not at 7%.

Final Conclusion: The reference was answered in favour of the assessee on the classification and tax-rate questions, and the lower rate of tax was held applicable to stencil paper.

Ratio Decidendi: In construing entries in a sales tax notification, goods must be classified according to their ordinary commercial understanding, and a distinct specialised product will not be included in the entry for ordinary goods unless the language clearly so provides.

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