Market parlance test governs VAT classification of vegetable fat spread, which is treated as an unscheduled commodity.

Vegetable fat spread is not classifiable as edible oil under Entry No. 31 of the Third Schedule to the Karnataka Value Added Tax Act, 2003. Applying the market parlance test, the product was treated as a distinct commodity with its own identity, use and marketability, and not as edible oil merely because edible oil was one ingredient. The separate treatment of other edible oils and milk-based spread products in the schedule also supported distinct classification. It was therefore treated as an unscheduled commodity.

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Issues: Whether vegetable fat spread is covered by Entry No. 31 of the Third Schedule to the Karnataka Value Added Tax Act, 2003 as edible oils, or whether it falls in the residuary unscheduled category.

Analysis: The entry has to be construed by applying the market parlance test as the primary test of classification. On that test, vegetable fat spread is a distinct commodity with separate identity, use and marketability and is not understood in trade as edible oil merely because edible oil is one of its ingredients. The presence of other entries in the same schedule dealing separately with other edible oils and with other milk-based spread products supports the conclusion that the legislature intended distinct treatment for different commodities with separate commercial identity. The composition of the product also did not assist the assessee, since the product contained ingredients other than edible oil and therefore could not be equated with edible oil as such.

Conclusion: Vegetable fat spread does not fall within Entry No. 31 of the Third Schedule to the Karnataka Value Added Tax Act, 2003 and is liable to be treated as an unscheduled commodity.

Ratio Decidendi: For classification under a taxing entry, the controlling test is the product's commercial identity in common parlance, and a commodity having a distinct market identity is not classified under an entry covering one of its ingredients merely because of its composition.

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