The central legal point established in the judgment is the interpretation of 'mill-made textile' under the General Sales Tax Act and its application to cloth manufactured by powerlooms.

1. The short question arising for determination in this Tax Revision Case is whether the cloth manufactured by the aid of powerlooms is exempted from sales tax in view of S.SA 1 (i) of the General Sales Tax Act, 1125. The relevant part of the section is in these terms: -

"5A. Exemption of tax on the sales of mill-made textiles (other than pure silk), tobacco and sugar. (1) The sale by any dealer of -

(i) mill-made textile, other than pure silk,

(ii)

2. It is agreed that the commodity with which we are concerned in this case is not silk. It is also admitted that the cloth with which we are concerned is manufactured in powerlooms and further that those powerlooms are housed in a factory.

3. The question therefore is whether such cloth can be said to fall within the term "mill-made textile" used in S.SA (1) (i). Under the Sales Tax Act, as we read it, textiles have been divided into two; those that are made in handlooms and those that are made with the aid of machines. "Mill" can have two meanings, machine, or a mill understood in the popular sense meaning the building or the factory in which machines are housed. We are inclined to take the view that even if cloth is made in powerloom which is not housed in a factory it will come within the term'mill-made textile'. However the question does not specifically arise here in view of the fact that the cloth with which we are concerned was manufactured in a machine housed in a factory. Regarding this we feel no doubt that it is 'mill-made textile.'

4. Our attention has been invited to the decision of the Madras High Court in Sri. Dhandapani Power-loom Factory, Erode v. Commercial Tax Officer, Coimbatore and Another reported in (1961) 12 STC. 304 and relied on by the Tribunal. The reasoning of the learned judge is contained in the following passage:

"S. 2(b) of Act XX of 1954 only refers to cloth etc. made in mills. In the affidavit filed in support of the petition, it is stated that a power-loom is not a mill and the cloth produced on power-looms would not be liable to the additional tax. No counter affidavit has been filed controverting this statement that a power-loom is not a mill. The learned Additional Government Pleader contended that mill goods would include power-loom goods, as the essential element in both of them would be employment of machinery. I cannot agree. Mill cloth is a familiar variety of cloth and everybody knows what a mill is. In popular language, a power-loom cloth is never associated with a mill cloth".

5. With great respect we are unable to agree. The distinction is as we have pointed out between cloth manufactured in hand-looms and those made with the aid of machinery.

6. In the result, we allow this Tax Revision Case but make no order as to costs. Allowed.