ABDUL RASHID v. COMMISSIONER OF SALES TAX, M. P. — 1954 DIGILAW 73 (BOM)

ORDER DEO, J. - This is an application under section 23(2)(b) of the Central Provinces and Berar Sales Tax Act, 1947, to require the Board of Revenue to make a reference on the grounds that questions of law arise out of its order passed under section 22(5) of the Act and that its order passed on the 27th March, 1952, under section 23(1) refusing to make the reference was not justified. 2. The facts of the case, as they appear from the order of the Board under section 22(5), are : The assessee, who is a manufacturer of bidis at Kamptee, District Nagpur, used to despatch bidis outside the State to several persons under written agreements similar to the one reproduced in the order. On an interpretation of the several clauses of this agreement the Board of Revenue came to the conclusion that the transactions amounted to sales within the meaning of the Act. This conclusion is said to be supported by copy of the bills issued by the assessee. Reliance was placed the Board on its decision in Hirji Govindji, In re ([1952] 3 S.T.C. 263; [1951] N.L.J. 516) regarding the nature and incidents of a pakka adat transaction. 3. Whether the facts found do or do not bring the assessee within certain provisions of the taxing statute or its statutory rules is undoubtedly a question of law. The interpretation of the agreement in question to determine the jural relation of the assessee and so-called agent, and the admissibility of the bills issued subsequently to interpret the agreement are unquestionably questions of law. There is considerable force in the contention of the learned counsel for the assessee that the Board of Revenue has erred in the interpretation of the agreement in the light of the relevant law. He contends that clause 5 of the agreement is wrongly construed and in construing that clause the Board failed to take into consideration clause 2, that proper effect was not given to clause 8 and the agreement has not been interpreted as a whole, and that even on the reasoning adopted by the Board the assessee was entitled to a relief. I am of course not expressing any opinion on these contentions. I have adverted to them to indicate that questions of law do arise on the facts of the case. I am of course not expressing any opinion on these contentions. I have adverted to them to indicate that questions of law do arise on the facts of the case. In rejecting the application under section 23(1) the President of the Board observed :- "It can be conceded that a question of law does arise in this case - though not exactly in the form suggested by the applicant's learned counsel. In coming to the conclusion that the despatches made by the applicant to his so-called agent amounted to sales, I relied not merely on the terms and conditions of the 'agency' agreement, but also on the form and contents of the bills made out by the applicant for recovering the amounts due to him on the transactions. The question, therefore, if at all it is to be framed, will have to take note of both the 'agency' agreement and of the bills sent to the 'agent'. But I am unable to subscribe to the view that each and every question of law that might arise in the proceedings before the Board should or need be referred to the High Court on demand made by the party aggrieved. When the legal position is clear beyond any reasonable doubt - particularly where the decision reached is derived from statute law itself - there would hardly be a case for the making of a reference. Any view to the contrary would only result in duplication before the High Court of the proceedings before the Board - a result that could hardly have been intended by the Legislature. Applying this principle to the case before us, the position is that the decision was reached primarily on the basis of section 26 of the Sale of Goods Act and was supported by certain other circumstances. Practically the only point that the applicant's learned counsel has urged in controverting the view taken is that the applicant retained control over sales made by his 'agent'. That, it is suggested, he did by controlling the prices charged by the 'agent'. This argument has already been dealt with in the second sub-paragraph of paragraph 1 of my order. The learned counsel for the State has rightly added that it is not unusual for large-scale manufacturers of commodities in general demand to control the rates at which they are sold to the ultimate consumer." 4. This argument has already been dealt with in the second sub-paragraph of paragraph 1 of my order. The learned counsel for the State has rightly added that it is not unusual for large-scale manufacturers of commodities in general demand to control the rates at which they are sold to the ultimate consumer." 4. In supporting the order of the Board of Revenue the learned Additional Government Pleader submitted that where the question of law is well-settled or where there is no doubt as to the answer to the question of law arising in the case, taking into consideration the facts and the relevant provisions of law, refusal to make a reference is justified. According to him, the questions of law arising in this case are fully answered in Messrs Shriram Gulabdas v. The Board of Revenue ([1953] 4 S.T.C. 340; I.L.R. (1953) Nag. 332). That case was decided after the Board of Revenue refused to make a reference in the instant case. Refusal to make a reference cannot, therefore, be said to be justified because the questions of law can now be answered in a particular way by relying on this decision. In my view, before applying the ratio in the case cited, the several questions of law arising in the case, as indicated above, would first have to be decided. 5. Where on an application under section 66(1) of the Income-tax Act, the Commissioner refuses to State the case on the ground that the question arising in the case is a settled question of law, it amounts to saying that no question of law arises within the meaning of that section; and the High Court may require the Commissioner to state the case and to refer it : Lakshmi Pat Mahadevi Garu v. Commissioner of Income-tax ([1940] 8 I.T.R. 489). In refusing to make the reference on the ground that the question of law was well-settled, the Commissioner had there relied on a decision of the Privy Council and another decision of the Calcutta High Court. The Judicial Committee did not decide the point and left it open. The applicability and soundness of the Calcutta decision were questioned before the Oudh Chief Court. The Judicial Committee did not decide the point and left it open. The applicability and soundness of the Calcutta decision were questioned before the Oudh Chief Court. If was held that even if the Calcutta High Court had taken the view accepted by the Commissioner, it could not be said that the question of law arising in the case was a settled question so far as the Oudh Chief Court was concerned. In Dhanrajmal Chatandas v. Commissioner of Income-tax ([1942] 10 I.T.R. 384) it was held that the ultimate decision on a point of law, whether for or against the Commissioner, can have no bearing on the question whether there was a point of law upon which the case should have been stated. This principle was accepted in Sardar Singar Singh and Sons v. Commissioner of Income-tax ([1942] 10 I.T.R. 441). There is no decision of this Court that a reference cannot or need not be made if the question of law can be answered by the Board of Revenue with reference to a decision of this Court. 6. The provisions of the Sales Tax Act are not different. The words "where the Tribunal decides to make a reference to the High Court, it shall draw up a statement of the case and refer it accordingly" in section 23(1) of the Act have the same meaning as the words "the Appellate Tribunal shall .................. draw up a statement of the case and refer it to the High Court" in section 66(1) of the Income-tax Act. In either case the assessee has a right to require the Tribunal to state the case if a question to law arises of its order. The use of the word "require" instead of "apply to" in both the Acts is not without significance. The assessee can make a demand as of right if such a question arises. The jurisdiction of the Tribunal is to decide whether a question of law arises. Having held that such a question arises it has no jurisdiction to refuse to make a reference even on the ground that a substantial or controversial question of law does not arise. Failure to make a reference amounts to refusal to exercise jurisdiction and can be set right by an order of mandamus under section 66(2) of the Income-tax Act and section 23(3) of the Sales Tax Act. Failure to make a reference amounts to refusal to exercise jurisdiction and can be set right by an order of mandamus under section 66(2) of the Income-tax Act and section 23(3) of the Sales Tax Act. Such a power exists, apart from these specific provisions : Alcock Ashdown & Co. v. The Chief Revenue Authority, Bombay ((1923) A.I.R. 1923 P.C. 138, 142). 7. A decision by the Board of Revenue on a question of law is not final. Whether that decision is correct or not is irrelevant. When that Board decides a case it necessarily believes it to be a correct decision. But if questions of law arise out of its decision, it is the duty of the Board to state and refer the case to the High Court for final decision on the questions of law involved. Facts in any two cases are rarely identical. Consequently, whether those facts bring an assessee within the provisions of a taxing statute or its statutory rules may have to be differently decided. It must be remembered that the final authority on questions of law arising on the facts of any assessment case under the Sales Tax Act is the High Court and not the Board of Revenue. It, therefore, follows that the Board of Revenue has to draw up the statement of the case and refer it to the High Court whenever questions of law do arise out of its order section 22(5) of the Act, except where the law is well-settled, so far as this High Court is concerned, by a decision of the Supreme Court. As observed in Nemkumar Kesrimal v. Board of Revenue ([1953] 4 S.T.C. 327; (1953) N.L.J. 606) to which I was a party. "The Sales Tax Act does require the Board of Revenue to state the case and the question of law arising out of its order. It is not for that authority to decide whether the questions of law are open to debate or not. That authority and the authorities subordinate to it are bound to follow the decision of this Court. Unless a reference is made to the High Court, the correctness of that view cannot be tested. It is not for that authority to decide whether the questions of law are open to debate or not. That authority and the authorities subordinate to it are bound to follow the decision of this Court. Unless a reference is made to the High Court, the correctness of that view cannot be tested. The Board of Revenue has, therefore, to state a case whenever a question of law arises out of its order, unless it is settled by a decision of the Supreme Court." These observations were made with reference to the contention of the learned Additional Government Pleader that the questions arising in the case could no longer be regarded as debatable questions of law in view of the decision in Messrs Shriram Gulabdas v. Board of Revenue ([1953] 4 S.T.C. 340; I.L.R. (1953) Nag. 332). 8. Shriram Gulabdas's case ([1952] 3 S.T.C. 343; I.L.R. 1953 Nag. 332) has not dealt with questions of law arising in this case as indicated in paragraph 4 above. It has not endorsed the correctness of the view in Hirji Govindji, In re ([1952] 3 S.T.C. 263; [1951] N.L.J. 516). It has not decided whether on the facts as appearing in the instant case there is a sale within the meaning of the Act. The submission of the learned Additional Government Pleader that the questions of law arising here were settled by the decision is therefore not acceptable. That decision does not warrant the submission that refusal to make a reference is justified where there is apparently no doubt in the mind of the Board of Revenue as to the answers to the questions of law arising in the case, taking into consideration the facts and the relevant provisions of law. If the contention of the learned counsel is accepted, there may be no question of law for reference under section 23(1), unless the Board is of the view that its decision under section 22(5) on questions of law is erroneous. 9. I am therefore, of the opinion that the order of the Board of Revenue refusing to make a reference is not justified. 9. I am therefore, of the opinion that the order of the Board of Revenue refusing to make a reference is not justified. It is set aside and the Board is directed to state the case and refer the following question of law arising out of its order dated the 3rd December, 1951 :- "Whether on the facts of this case the despatches of bidis outside the State amount to 'sales' within the meaning of the Act, and the amount of Rs. 3,34,217-14-3 can be included in the taxable turnover". 10. The application is allowed with costs. Counsel's fee Rs. 100, if certified. MANGALMURTI, J. - I agree with my learned brother that the refusal of the Board of Revenue to make a reference is this case was not justified and concur in the order proposed by him. As however I do not agree with him on some of the points discussed by him in his opinion, I am writing this separate opinion only to indicate that difference, I am, however, not expressing any definite opinion on the points of difference as it is not necessary to do so for the purpose of this case and as they were not fully argued before us. 2. My learned brother seems to be of the opinion that whenever a question of law arises out of the order passed by the Board of Revenue under sub-section (5) of section 22 of the Central Provinces and Berar Sales Tax Act, 1947, it is bound to refer it to the High Court "except where the law is well-settled, so far as the High Court is concerned, by a decision of the Supreme Court". I am not convinced that this view agrees with the wordings of sub-sections (1), (2) and (3) of section 23 ibid. Under sub-section (1) ibid the dealer or the Commissioner may require the Tribunal to refer to the High Court any question of law arising out of the order under section 22(5) and "where the Tribunal decides to make a reference to the High Court" it draws up a statement of the case and refers it. Sub-section (2) requires that if the Tribunal refuses to make a reference it shall record its reasons in writing. Thus the Tribunal has to decide the matter judiciously, but beyond this no limit is placed upon the discretion of the Tribunal to make a reference. Sub-section (2) requires that if the Tribunal refuses to make a reference it shall record its reasons in writing. Thus the Tribunal has to decide the matter judiciously, but beyond this no limit is placed upon the discretion of the Tribunal to make a reference. If it had been the intention of the legislature that every case should be referred to the High Court whether the point of law arising is of importance or not and even if on the material there could no possibly be two opinion on it, it would have said so very clearly. On the other hand, if it is held that the matter is in the discretion of the Tribunal there would be no difficulty as sub-section (3) ibid lays down - "If, upon the receipt of an application under clause (b) of sub-section (2), the High Court is not satisfied that the refusal was justified, it may require the Tribunal to state the case and refer it, and on receipt of such requisition, the Tribunal shall act accordingly." 3. The next point is about the extent of the exception which my learned brother gives in the following words :- "It, therefore, follows that the Board of Revenue has to draw up the statement of the case and refer it to the High Court whenever questions of law do arise out of its order under section 22(5) of the Act, except where the law is well-settled, so far as this High Court is concerned, by a decision of the Supreme Court." In Nemkumar Kesrimal v. Board of Revenue ([1953] 4 S.T.C. 327; [1953] N.L.J. 606) we get the following observations :- "The Board of Revenue has therefore to state a case whenever a question of law arises our of its order, unless it is settled by a decision of the Supreme Court." If this means that the Board of Revenue has to state a case whenever a question of law arises out of its order even if that question is settled by a decision of this High Court, with the greatest respect I find myself unable to agree. I am not only aware of the extent of the binding nature of the Division Bench decision but have also very great respect for it and for the opinion of my learned brother. I am not only aware of the extent of the binding nature of the Division Bench decision but have also very great respect for it and for the opinion of my learned brother. Had it been, however, necessary to depend on the exception for the decision of this case a reference to a bigger Bench would have been necessary. But the question of law arises in this case independently of the exception and I am placing my doubts on record to avoid the impression that I hold the same view. 4. As already observed however the rest of the discussion of my learned brother clearly shows how the question of law mentioned by him arises and how it is important and why the order of the Board of Revenue refusing to make a reference is not justified. I agree with my learned brother in allowing the application with costs and requiring the Board of Revenue to state the case and refer it. Counsel's fee Rs. 100 if certified. Application allowed.