Definition of "mills" clarified for sales tax: power-loom cloth not included.

Sales Tax Commissioner, UP. Versus Ladha Singh Mal Singh  

Sales Tax Commissioner, UP. Versus Ladha Singh Mal Singh   - [1971] 28 STC 325 (SC)   Issues:
Interpretation of term "cloth manufactured by mills" for sales tax purposes.

Analysis:
The Supreme Court addressed the issue of whether cloth manufactured using power-looms can be considered "cloth manufactured by mills" for sales tax assessment. The High Court had ruled that cloth produced by power-looms did not fall under the category of "cloth manufactured by mills." The Court analyzed the definition of "mills" from various sources, including dictionaries and legal precedents. It was noted that the common understanding of a mill includes a building with machinery for processing goods. The Court emphasized that the context of the term "mills" in the notification was crucial. The notification categorized cloth broadly into mill-made and loom-made, with different tax rates applicable. The Court concluded that the energy source for operating looms, whether manual or power, does not change the essential character of the cloth. Mill-made cloth involves an automatic and machinery-driven weaving process. The judgment referenced previous cases to illustrate the concept of mills in different contexts. The Court rejected the argument that power-operated looms automatically classify a building as a mill, as it would conflict with the accepted distinction between handloom, power-loom, and mill-made cloth. The Court upheld the High Court's decision, dismissing the appeal with no costs awarded.