HSN-based classification prevails over commercial parlance where specific schedule entries apply, excluding residuary taxation.

Where a sales tax statute adopts HSN-linked schedule entries, classification must follow the HSN meaning and the corresponding tariff description, not common or commercial parlance. Products marketed as Ujala Supreme and Ujala Stiff and Shine were treated as diluted Acid Violet Paste and poly vinyl acetate in primary form, so they remained within the specific Third Schedule entries and could not be shifted to the residuary notification entry merely because of dilution, processing, or market form. The common parlance test applied only where an entry lacked an HSN number and was therefore inapplicable here.

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Issues: (i) whether the products marketed as Ujala Supreme and Ujala Stiff and Shine were classifiable under specific entries in the Third Schedule to the Kerala Value Added Tax Act, 2003 on the basis of their HSN classification, or whether they fell under the residuary notification entry; (ii) whether, in the presence of HSN-linked schedule entries, the common parlance or commercial parlance test could be used to classify the goods as different commodities.

Issue (i): whether the products marketed as Ujala Supreme and Ujala Stiff and Shine were classifiable under specific entries in the Third Schedule to the Kerala Value Added Tax Act, 2003 on the basis of their HSN classification, or whether they fell under the residuary notification entry.

Analysis: The statutory scheme gives primacy to the scheduled entries carrying HSN numbers. Goods specified in the Second and Third Schedules are taxable at the rates provided therein, and the notified 12.5% rate applies only to goods not falling under those clauses. The Rules of Interpretation provide that commodities with HSN numbers are to be given the same meaning as under the Customs Tariff Act, 1975, while common parlance applies only to entries without HSN numbers. The materials on record, including the technical reports and the earlier excise classification decisions, showed that Ujala Supreme remained a diluted form of Acid Violet Paste and Ujala Stiff and Shine remained a form of poly vinyl acetate in primary form. Those goods therefore corresponded to the relevant HSN-based schedule entries and could not be displaced into the residuary entry merely because they had undergone dilution or processing.

Conclusion: The products were covered by the specific HSN-linked entries in the Third Schedule and did not fall under the residuary entry.

Issue (ii): whether, in the presence of HSN-linked schedule entries, the common parlance or commercial parlance test could be used to classify the goods as different commodities.

Analysis: The common parlance or commercial parlance test is only a fallback where the schedule entry has no HSN number. Once the legislation assigns an HSN number to the commodity, that classification governs, and interpretation must proceed in accordance with the HSN and the corresponding tariff meaning. A commodity does not lose its schedule identity merely because it is marketed in a different commercial form if the applicable HSN classification remains the same. The residuary entry cannot override a specific schedule entry backed by HSN classification.

Conclusion: The common parlance or commercial parlance test was inapplicable to displace the specific HSN-linked classification.

Final Conclusion: The assessment of the goods had to be made by reference to the specific Third Schedule entries read with the HSN-based interpretative rules, with the result that the revenue could not sustain classification under the residuary notification entry.

Ratio Decidendi: Where a sales tax statute adopts HSN-based schedule entries, those specific classifications prevail over commercial parlance, and a residuary entry cannot be invoked for goods that fall within an identifiable HSN-linked schedule entry.

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