Common parlance test governs sales tax classification of craft paper as paper, not a paper product.

Craft paper was held to fall within the "paper" entry under the Kerala sales tax schedule because classification must follow the commodity's ordinary and commercial identity. The court applied the common parlance test and held that the purchaser's end use, including sale mainly to carton manufacturers, is not a safe or determinative basis for treating paper as a paper product. Entry 94(ii) was read as covering articles made from paper, such as paper products, notebooks and printed materials, rather than paper itself. Craft paper was therefore classified under entry 94(i) and taxed at the lower rate applicable to paper.

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Issues: Whether craft paper sold by the assessee falls under entry 94(i) as paper or under entry 94(ii) as paper products for the purpose of levy of sales tax.

Analysis: The charging provision under section 5 of the Kerala General Sales Tax Act, 1963 makes the rate depend upon the relevant schedule entry. The expression "paper" in entry 94(i) was held to include craft paper in its ordinary and commercial sense. Entry 94(ii) separately groups newsprint, cardboard, paper products, notebooks and printed materials, indicating that the higher rate applies to articles produced with or out of paper, not to paper itself. The use to which the purchaser puts the goods was held to be an unsafe test and not determinative of the nature of the commodity. Applying the common parlance test, craft paper was found not to be a paper product merely because it is sold mainly to carton manufacturers.

Conclusion: Craft paper falls under entry 94(i) of the First Schedule and is taxable at 4 per cent, not under entry 94(ii) at 5 per cent.

Ratio Decidendi: Classification of goods under a sales tax schedule must be determined by their common parlance or commercial identity, and not by the end use to which a particular purchaser puts them; where paper remains paper in ordinary trade understanding, it cannot be treated as a paper product merely because it is used for packing.

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