Mill-made cloth exemption survives post-manufacture printing, while durries are treated as carpets for sales tax.

Hand dyeing or printing applied after manufacture did not alter the essential identity of mill-made saris, so they remained mill-made cloth within item 35 of the notification and stayed exempt from sales tax. By contrast, durries were treated as carpets under item 40 of the later notification, following the Court's earlier view in State of Orissa v. Modi Stores, and were therefore taxable under the Orissa Sales Tax Act. The references were answered accordingly, with the first issue decided for the assessee and the second against it.

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Issues: (i) Whether handprinted mill-made saris on which a second processing is done through manual labour before sale remain mill-made cloth within item 35 of Notification No. C.T.A. 56/57-32518-F dated 16 December 1957 and are exempt from sales tax. (ii) Whether durries are carpets within item 40 of Notification No. 33927-C.T.A. 130/57-F dated 30 December 1957 and are taxable under the Orissa Sales Tax Act.

Issue (i): Whether handprinted mill-made saris on which a second processing is done through manual labour before sale remain mill-made cloth within item 35 of Notification No. C.T.A. 56/57-32518-F dated 16 December 1957 and are exempt from sales tax.

Analysis: Item 35 covered all mill-made cotton, woollen or silken cloth, excluding pure silk cloth, and section 6 of the Orissa Sales Tax Act gave effect to the exemption. The decisive question was whether hand dyeing or printing after the cloth came out of the mill destroyed its character as mill-made cloth. The reasoning followed the principle that mere printing or dyeing does not transform cloth into a different commodity when its essential identity remains unchanged. The decision in Kailash Nath was treated as conclusive on this point, while the other authorities cited were distinguished.

Conclusion: The goods remained mill-made cloth and continued to fall within item 35. The answer was in favour of the assessee.

Issue (ii): Whether durries are carpets within item 40 of Notification No. 33927-C.T.A. 130/57-F dated 30 December 1957 and are taxable under the Orissa Sales Tax Act.

Analysis: This question was governed by the earlier decision of the Court in State of Orissa v. Modi Stores, which had already treated durries as carpets for the purpose of the notification. No separate departure from that view was made.

Conclusion: Durries were held to be carpets within item 40 and therefore taxable. The answer on this issue was against the assessee.

Final Conclusion: The references were answered by holding that the first question was in favour of the assessee and the second question against it, with the references ultimately disposed of without costs.

Ratio Decidendi: A process of hand dyeing or printing applied after manufacture does not by itself alter the essential identity of mill-made cloth so as to remove it from an exemption for mill-made cloth, unless the commodity is transformed into a different commercial product.

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