Commercial parlance test for tax classification: multifunctional digital copier treated as a copier, not a computer peripheral.

A multifunctional digital copier was treated as a copier and xerox machine under Entry 23 of Part-II of the Orissa Entry Tax Act, 1999 because its commercial identity was that of a device meant to multiply copies. The court applied the commercial parlance test and held that computer-linked functions did not shift the product to Entry 70 of Part-I as a computer peripheral where a specific entry for copiers existed. The classification adopted below on a functional test was therefore unsustainable, and the higher classification assessment was set aside.

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Issues: Whether a multifunctional digital copier is classifiable under Entry 23 of Part-II of the Schedule to the Orissa Entry Tax Act, 1999 as a copier or xerox machine, or under Entry 70 of Part-I as a computer peripheral.

Analysis: The product was found to be principally a copier intended to multiply copies, and its market identity was that of a copier. The classification adopted by the authorities below by applying the functional test and treating the machine as a computer peripheral was held to be unsustainable because the schedule contained a specific entry for copier and xerox machine in Entry 23 of Part-II. The commercial parlance test was applied to determine the product's true identity, and the presence of computer-linked functions did not displace the specific classification.

Conclusion: The machine falls within Entry 23 of Part-II of the Schedule to the Orissa Entry Tax Act, 1999 and not under Entry 70 of Part-I; the revision succeeded and the assessee's assessment under the higher classification was set aside.

Final Conclusion: The impugned classification order did not survive, and the original assessment was restored with the revenue's position accepted.

Ratio Decidendi: For tax classification, the commercial parlance or commercial identity test prevails, and a specific tariff or schedule entry must be applied to goods whose market identity answers that description, even if they possess additional functions.

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