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PETITIONER: SALES TAX COMMISSIONER, U. P.

       Vs.

RESPONDENT: M/S.  LADHA SINGH MAL SINGH

DATE OF JUDGMENT27/07/1971

BENCH: GROVER, A.N. BENCH: GROVER, A.N. HEGDE, K.S.

CITATION:  1971 AIR 2221            1971 SCR  941

ACT: U.P.  Sales Tax Act, 1948-Notification dated June 19,  1948- Cloth  manufactured  by  looms  worked  by  power-If   cloth manufactured by mills.

HEADNOTE: Under  the notification dated June 19, 1948 issued under  s. 3(A) of the U.P. Sales Tax Act, 1948, sales tax at the  rate of  6 pies in a rupee was payable on "cloth manufactured  by mills".   Tax at that rate was sought to be levied on  cloth manufactured by means of looms worked by power on the  basis that it was "cloth manufactured by mills" within the meaning of  the  notification.   The  High  Court  held  that  cloth manufactured  by power looms could not fall under  the  term "cloth manufactured by mills".  Dismissing the appeal, HELD:What  has to be seen is the context in  which  the word "mill" is used in the notification.  The  notification, divides cloth broadly into two categories-mill made and loom made.  Loom made cloth would include all cloth  manufactured on  looms  and, therefore, whether the  energy  is  supplied manually or by power cannot convert the essential  character of the cloth, namely, its manufacture on looms.  As  regards mill  made  cloth the actual process of weaving is  more  or less  automatic, pre-conceived and definite and it  involves functioning of machinery.  In popular language a power  loom cloth is never associated with a mill cloth. [942H943A] Further,  it  cannot be said that once the looms  worked  by power  are used in a building the essential  characteristics of  mills would be satisfied.  To hold so would be  contrary to  the accepted and popular meaning of hand-loom or  power- loom  cloth and mill-made cloth.  The distinction which  was kept  in  view  when the notification  was  promulgated  was between  the  aforesaid  two categories or  types  of  cloth involving  essentially a difference in the process in  which it was manufactured. [943H-944B] Sri  Dhandapani Power Loom Factory, Erode v. Commercial  Tax Officer,  Coimbatore & Anr., 12 S.T.C. 304 and  Ellerker  v. Union Cold Storage Co. Ltd., [1939] 1 A.E.L.R. 23,  referred to.

JUDGMENT:

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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 564 of 1967. Appeal  by special leave from the judgment and  order  dated August 9, 1966 of the Allahabad High Court in S.T.R. No. 563 of 1962. 0. P. Rana, for the appellant. The respondent did not appear. The Judgment of the Court was delivered by Grover,  J.  The only point for decision in this  appeal  by special leave is whether the cloth manufactured by means of 942 looms worked by power can be regarded as "cloth manufactured by  mills" for which sales tax was payable at the rate of  6 pies  in a rupee in terms of the notification dated June  8, 1948  issued  under S. 3A of the U.P. Sales Tax  Act,  1948. The  general  rate of tax on sale of cloth otherwise  was  3 pies  per rupee.  The High Court on a reference  made  under the   relevant  provisions  of  the  Act  held  that   cloth manufactured  by means of power looms could not  fall  under the term "cloth manufactured by the mills". The  approach  of  the High Court was that  since  the  word "mills"  had  not been defined either by the Act or  by  the notification  mentioned  before  the meaning  of  the  words "cloth  manufactured  by  the  mills"  must  be   considered according to the common understanding of mankind.  Reference was made to the dictionary meaning as given in Webster’  New International   Dictionary,   Vol.  2.  According   to   the dictionary two things were required (1) a building and (2) a machinery, in order to constitute a "mill".  The meaning  of the word "machine", according to the dictionary in a popular and  mechanical  sense  is.................  more  or   less complex  combination of mechanical parts, as  levers,  gears sprocket  wheels,  pulleys,  shafts  and  spindles,   ropes, chains,  and  bands,  cams and  other  turning  and  sliding pieces,  springs,  confined fluids etc., together  with  the frame  work and fastenings, supporting and connecting  them, as when it is designed to operate upon material to change it in   some  pre-conceived  and   definite   manner........... According to the High Court looms which are merely worked by power would hardly fall within the meaning of the word  "ma- chine".   It has been pointed out that looms worked by  hand or  by  power  have not been shown by  any  evidence  to  be different.  It does not appear to have been disputed  before the High Court that a building having looms worked by manual labour  would not be a mill.  The court found no  difference between building containing looms worked by manual labour or by power. According  to Words and Phrases, Vol. 27 the term "mill"  in modem  usage, includes various machines or  combinations  of machinery,  as  cotton mills, fulling mills,  powder  mills, etc.,  to some of which the term "manufactory" or  "factory" is  also applied.  In our judgment although  the  dictionary meaning  may be of considerable assistance in  deciding  the point  before us but what has to be seen is the  context  in which  the word "mills" is used in the notification.  It  is common ground that if cloth was manufactured by looms worked by manual labour the notification was not applicable and the rate  of  tax  per  rupee was 3 pies but  if  he  cloth  was manufactured by mills then the rate was to be 6 pies.   Thus cloth  has been divided broadly into two  categories,  mill- made  and  loom-made.  It is quite  obvious  that  loom-made cloth would include all cloth manufactured on looms.  It  is difficult  to understand how the energy by which  the  looms are worked                             943 would  make  any  difference.  In other  words  whether  the

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energy  is supplied manually or by power cannot convert  the essential character of the cloth, namely, its manufacture on looms.   As  regards mill made cloth the actual  process  of weaving Is more or less automatic, preconceived and definite and  it involves the functioning of  machinery.   Ramchandra Iyer  J.,  in Sri Dhandapani Power-loom  Factory,  Erode  v. Commercial Tax Officer, Coimbatore and Anr.(1), was right in observing that mill cloth is a familiar variety of cloth and everybody knows what a am is. In popular language, a  power- loom cloth is never associated with a mill cloth. According to Mcnaghten J., in Ellerker v. Union Cold Storage Co.  Ltd., (2) a mill is building where goods are  subjected to treatment or processing of some sort and where  machinery is used for that purpose.  The illustrations given were:               "The miller in his corn-mill grinds wheat into               flour,  ,or oats into oatmeal.  So too,  at  a               scutching-mill  the miller scutches the  flax,               to  prepare it for spinning.   The saw-mill,               the  rolling  mill,  the  flatting  mill,  the               puffing  mill  and  the cotton  mill  are  all               buildings where goods are treated or subjected               to some process." It  must be remembered that the meaning of the  word  "mill" ,or  "mills"  would vary according to the context  in  which that word is used.  In the above case a company carried on a large  ,cold storage business.  In some of the  cold  stores part of the building was used for the manufacture of ice for sale; others were ,only used for the purpose of storage.  It was  held that all the premises fell within the  meaning  of the  words  in  Schedule D Cases 1 and 11, r.  5(2)  of  the Income-tax Act which were : Mills factories or other similar premises. Counsel for the appellant has sought to argue that once  the looms  worked by power are used In a building the  essential characteristics  of  "mills" would be satisfied and  if  any cloth  is  manufactured  on those looms it  would  be  cloth manufactured   by  "  mills"  within  the  meaning  of   the notification.  The falacy (1)  12 S. T. C. 304. (2)  [1939] A. E.  L. R. 23. 944 in this argument is that by the same reasoning a building in which  looms worked by manual labour are to be  found  would also have to be regarded as "mills".  This would be contrary to  the  accepted and popular meaning of handloom  or  power loom  cloth and mill made cloth.  We are satisfied that  the distinction which was kept in view when the notification was promulgated  was  between the aforesaid  two  categories  or types  of  cloth involving essentially a difference  in  the process by which it was manufactured. We  would accordingly uphold the view of the High Court  and dismiss the appeal.  There will be no order as to costs. K.   B.N.                                             Appeal dismissed. 945