High Court may decline to answer tax reference questions if party at whose instance referred is disinterested and no effective hearing occurs, keeping issues open, without permitting withdrawal.

ORDER :

G. S. Kulkarni, J.

1. By an order dated 12 November 2009 passed by the Maharashtra Sales Tax Tribunal, at Mumbai in Reference Application No. 180-181 of 2009, the following questions of law are referred to this Court to be answered in the present reference under Section 61(1) of the BOMBAY SALES TAX ACT , 1959 ("Bombay Act").

1) Whether vehicles affixed with trade mark which are sold, thereafter repurchased and resold to others on hire purchase without fixing any further trade mark, are not eligible to claim resale under clause (26) of Section 2 read with Section 8(ii) and the premium realized on hire- purchase would form part of taxable turnover under the BOMBAY SALES TAX ACT , 1959 even though the same amount of hire purchase premium is subject to the levy of service tax under Chapter V and VA of the Finance Act, 1994 ?

2) Whether on the facts and circumstances of the case and evidence on record the Tribunal was justified in holding that hire premium charges recovered by the hirer of the vehicles forms part of sale price as defined under section 2(29) of the B.S.T. Act, 1959, ignoring the fact that Parliament in exercise of its powers under entry 97 of list I to the Constitution of India had held such hire premium charges are taxable under Finance Act, 1994?

3) The Statement of facts and necessary copies of documents shall accompany the Reference Application.

2. The proceeding of this reference are also circulated at the instance of the Applicant seeking withdrawal of the reference. On behalf of the Applicant (Original Appellant before the Tribunal), it is contended that the Applicant is no more interested in the reference being answered as the Tribunal has already held in favour of the department in the Second Appeal. It is hence stated that obviously the revenue would also not be interested in the reference being answered.

3. Once a reference on a question of law is made by the Tribunal, normally the same needs to be answered. However, there are exceptions. In the circumstances when a party at whose behest, a reference was made by the Tribunal, itself is taking a position that the reference be not answered, as to what would be the course of action to be adopted by the courts, needs to be considered. We request Mr. Atul Jasani, learned Advocate to assist the Court on the legal position on such issue who has ably assisted the Court to place on record the relevant decisions which are discussed hereunder.

4. A Coordinate Bench of this Court in Sales Tax Reference, (L) No. 30 of 2007 ( The Commissioner of Sales Tax, Maharashtra State Vs. M/s. Trinity Engineers Limited ) in similar circumstances passed the following order :-

“4. When all of them were listed today, Mr. Upadhyaya appearing for the Applicants-Commissioner of Sales Tax in each of these matters stated that no useful purpose will be served by entertaining these Motions, granting them and thereafter proceeding with the Reference in accordance with law simply because the Commissioner is no longer interested in obtaining any opinion and answer on the questions of law from this Court. Since the References are registered at the instance of the Applicants/Commissioner of Sales Tax who approached the Tribunal and sought its intervention to forward these questions, we accept Mr. Upadhyay’s statement, made on instructions. We not only dispose off all these Notices of Motion but all the References, as well. We clarify that the questions of law forwarded are kept open for being answered in an appropriate case.”

5. In Gajadhar Prasad Nathu Lal Vs. Commissioner of Wealth-Tax , M.P CWT (1970) 76 ITR 615 (MP), before the Division Bench of the High Court of Madhya Pradesh, the asse