Common parlance test for niwars: all varieties, including mono filament yarn niwars, fall within the sales tax exemption.

The exemption notification covering "tapes, niwars and laces" was read in its common parlance and popular sense, because it did not qualify "niwars" by reference to any material. Applying the functional character test rather than the raw material used in manufacture, the Court treated niwars as retaining the same identity and use whether made from cotton yarn or mono filament yarn. All kinds of niwars therefore fell within entry 25(iv) and were exempt from sales tax; the narrower view limiting the exemption to cotton yarn niwars was rejected.

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Issues: Whether all kinds of niwars, including niwars made of mono filament yarn, fall within entry 25(iv) of the exemption notification dated 11.04.1985 and are exempt from sales tax.

Analysis: The exemption notification issued under section 12 of the M.P. General Sales Tax Act, 1958 covered "tapes, niwars and laces" without qualifying the word "niwars" by reference to any particular material. The expression had to be understood in its common parlance and popular sense, as used by persons conversant with the goods, and the relevant test was the functional character of the product rather than the raw material used in its manufacture. On that approach, niwars retained the same identity and use whether made from cotton yarn or mono filament yarn, and the exemption could not be restricted only to cotton yarn niwars.

Conclusion: All kinds of niwars are covered by entry 25(iv) of the notification and are exempt from sales tax. The petitioners succeeded and the contrary view taken by the Commissioner was not sustained.

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