Commercial identity test for tobacco products: Mainpuri Tobacco was treated as exempt tobacco-based goods under the schedule.

Mainpuri Tobacco was treated as a tobacco product for purposes of Entry No. 42 of Schedule I to the M.P. GST Act, 1958, because its commercial identity was derived from tobacco even though it was a chewing preparation mixed with supari and chuna. The relevant test was not whether it was tobacco in the strict sense, but whether it was a product of tobacco as understood in popular and market parlance. Applying that approach and the prior decisions relied upon, the Tribunal concluded that Mainpuri Tobacco fell within the exemption for tobacco and tobacco products and that the assessments had to be revised accordingly.

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Issues: Whether Mainpuri Tobacco is covered by Entry No. 42 of Schedule I to the M.P. GST Act, 1958 as a tobacco product and is therefore exempt from tax.

Analysis: Entry No. 42 exempts tobacco, whether manufactured or unmanufactured, and tobacco products. The determining question was not whether Mainpuri Tobacco is tobacco in the strict sense, but whether it is a product of tobacco. On the facts, the commodity was a chewing preparation made from tobacco with supari and chuna added, and it was known in the market as Mainpuri Tobacco. Applying the prior decisions relied upon by the Tribunal and the principle that a commodity may be treated according to its popular and commercial character, it was held to be a product of tobacco.

Conclusion: Mainpuri Tobacco is a tobacco product covered by Entry No. 42 of Schedule I and is exempt from tax.

Final Conclusion: The appeals succeeded and the assessments were required to be revised on the basis that Mainpuri Tobacco was exempt.

Ratio Decidendi: A commodity known and marketed as a tobacco-based chewing preparation may be treated as a tobacco product and fall within a tax exemption for tobacco products when its essential commercial identity is derived from tobacco.

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