Mill-made fabrics exemption depends on commercial identity: bed sheets and towels qualified, but pillow covers did not.

Mill-made cloth cut into sizes and stitched at the ends for bed sheets, napkins and towels retained its character as mill-made fabrics because no substantial change in commercial identity occurred, so the tax-free exemption applied. Pillow covers, however, were made into a finished article of different use and substantial character through cutting, stitching and preparation, so they fell outside the exemption entry and were exigible to sales tax. The governing principle is that a mere change in form does not defeat an exemption where the goods remain commercially the same, but a materially different finished commodity does not qualify.

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Issues: (i) Whether bed sheets, napkins and towels made from mill-made cloth by cutting into sizes and stitching at the ends continued to be mill-made fabrics within the tax-free entry. (ii) Whether pillow covers made by cutting, stitching and preparing them for use were covered by the same exemption entry.

Issue (i): Whether bed sheets, napkins and towels made from mill-made cloth by cutting into sizes and stitching at the ends continued to be mill-made fabrics within the tax-free entry.

Analysis: Mill-made cloth did not lose its character merely because it was cut into pieces and stitched at the ends for use as bed sheets, towels or napkins. No substantial alteration or conversion into a different marketable commodity took place. The exemption applied to mill-made fabrics, and the changed form did not take the goods outside that description.

Conclusion: Yes. Bed sheets, napkins and towels continued to be mill-made fabrics and their sale was exempt from tax.

Issue (ii): Whether pillow covers made by cutting, stitching and preparing them for use were covered by the same exemption entry.

Analysis: Pillow covers involved cutting into different sizes, stitching and preparation into a finished article ready for a particular use. This amounted to a change of substantial nature and not a mere continuation of mill-made cloth in altered form. The exemption entry therefore did not extend to pillow covers.

Conclusion: No. Pillow covers were exigible to sales tax and were not covered by the exemption entry.

Final Conclusion: The reference was answered by holding that exemption was available for bed sheets, napkins and towels, but not for pillow covers.

Ratio Decidendi: Goods remain within an exemption entry for mill-made fabrics if cutting and stitching do not bring about a substantial change in commercial identity, but articles that emerge as a materially different finished commodity fall outside the exemption.

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