Power-loom cloth is not mill-made cloth under the sales tax notification, so the higher tax rate does not apply.

The meaning of "cloth manufactured by mills" in a sales tax notification was construed from its statutory context because the term "mills" was undefined. The notification drew a clear distinction between mill-made cloth and loom-made cloth, indicating that the decisive factor was the manufacturing process rather than whether the looms were powered manually or mechanically. Cloth produced on power-looms remained loom-made cloth and did not fall within the expression "cloth manufactured by mills"; the higher tax rate therefore did not apply.

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Issues: Whether cloth manufactured on power-looms is covered by the expression "cloth manufactured by mills" in the sales tax notification issued under section 3A of the U.P. Sales Tax Act, 1948.

Analysis: The expression "mills" was not defined in the statute or notification, so its meaning had to be gathered from the context in which it was used. The notification differentiated broadly between mill-made cloth and loom-made cloth, with a lower rate applying to loom-made cloth and a higher rate to cloth manufactured by mills. In that setting, the decisive feature was the nature of the manufacturing process, not the source of energy used to work the looms. Cloth manufactured on looms remained loom-made cloth whether the looms were worked manually or by power, and the popular understanding of a mill did not include such cloth merely because power was used.

Conclusion: Cloth manufactured by power-looms is not cloth manufactured by mills within the meaning of the notification, and the higher rate of tax was not applicable.

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