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TMI Blog1971 (7) TMI 131X X X X Extracts X X X X X X X X Extracts X X X X ..... e in terms of the notification dated June 8, 1948, issued under section 3A of the U.P. 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's New International Dictionary, Volum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een 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 the 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 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 mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Schedule D, cases I and II, rule 5(2) 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 fallacy 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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