Principle of ‘Substitutability’ Versus ‘Common Parlance’ Test : Ascertaining Classification of Goods

In a recent decision the European Court of Justice (‘ECJ') has examined the claim of a taxpayer alleging discriminatory and unfair classification by the tax authorities even though similarly placed goods were classified differently with a resultant lower tax-incidence.In this decision the ECJ has delineated the applicable tests for classification of similarly-placed goods which for want of better expression are collectively addressed as the “principle of substitutability” in this article.In the background of the ECJ's observations, this article examines the legal position applicable in India to determine similar disputes and traces the legal standard applicable in India i.e. the “common parlance” test. Overall, an attempt is made to contradistinguish the legal position between the European and Indian jurisprudence