Appeal No 564 of 1967
Appeal by special leave from the judgment and order dated August 9 1966 of the Allahabad High Court in STR No 563 of 1962
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 section 3A of the UP 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 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 vs Commercial Tax Officer Coimbatore and Anr1 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 vs 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 52 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 section T C 304
2 944 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 BN Appeal dismissed


Summary:
Under the notification dated June 19 1948 issued under section 3A of the UP 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 HELDWhat 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 vs Commercial Tax Officer Coimbatore  Anr 12 STC 304 and Ellerker vs Union Cold Storage Co Ltd  referred to