Common parlance and functional identity tests govern classification of brake fluid, which falls under the residuary entry.

Brake fluid was held not to fall within the lubricants entry under the Madhya Pradesh Commercial Tax Act, 1994 because it differed from lubricating oil in composition, physical properties and commercial identity. Applying the common parlance test and the functional character test, the Court noted that brake fluid performs a transmission function in a braking system rather than a lubricating function, and that excise tariff classifications also place hydraulic brake fluids and lubricating oils in different chapters. The lubricants entry was therefore rejected and the residuary entry was treated as the correct classification, with the tax assessments treating brake fluid as a lubricant quashed.

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Issues: Whether brake fluid falls within the entry for lubricants or is assessable under the residuary entry in the Madhya Pradesh Commercial Tax Act, 1994.

Analysis: Brake fluid and lubricating oil were found to be distinct products in composition, physical properties and commercial identity. The Court applied the common parlance test and the functional character test, and also noted that tariff classifications under the Central Excise Tariff Act, 1985 place lubricating oil and hydraulic brake fluids in different chapters and headings. Brake fluid was held to perform a transmission function in a braking system rather than a lubricating function, and therefore could not be treated as a lubricant merely because it is used in a mechanical system. On that basis, the reliance on the lubricants entry was rejected and the residuary entry was held to be the proper classification.

Conclusion: Brake fluid is not classifiable as a lubricant and is liable to tax under the residuary entry, in favour of the assessee.

Final Conclusion: The impugned tax assessments treating brake fluid as lubricant were quashed, and the matter was held to fall within the residuary rate applicable to unclassified goods.

Ratio Decidendi: In taxing statutes, classification of goods depends on their common parlance and functional identity, and a product cannot be placed in a specific entry when its commercial character and primary use show that it belongs elsewhere, including the residuary entry.

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