1982 (1) TMI 169 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Entitlement to claim set-off under rule 43(1)(a)(i) of the Bombay Sales Tax Rules, 1959.
2. Whether the High Court is required to answer a reference if the applicant wishes to withdraw it.

Detailed Analysis:

1. Entitlement to Claim Set-off under Rule 43(1)(a)(i) of the Bombay Sales Tax Rules, 1959
The core issue referred to the High Court was whether the Tribunal was correct in holding that the opponent was entitled to claim a set-off of the entire amount of tax actually recovered by the selling dealers, rather than just the amount legally recoverable on the sales of scrap batteries. This question was brought under section 61(1) of the Bombay Sales Tax Act, 1959, which allows a party aggrieved by an order of the Tribunal to seek a reference to the High Court for any question of law arising from such order.

2. Whether the High Court is Required to Answer a Reference if the Applicant Wishes to Withdraw It
During the hearing, the applicant-State expressed a desire not to prosecute the reference, suggesting that the question need not be answered. Ordinarily, such a statement would conclude the matter, and the court would record that the question need not be answered. However, the opponent-assessee argued that the party who initiated the reference cannot unilaterally abandon it and that the court has the discretion to decide whether or not to answer the question, considering all relevant circumstances.

The court examined section 61 of the Act, which outlines the procedure for referring questions of law to the High Court. The court noted that the Tribunal can only refer a case upon an application by an aggrieved party and cannot do so suo motu. The High Court's obligation to answer the question arises only upon a full, effective, and complete hearing of the case.

The court referred to the decision in M.M. Ispahani Ltd. v. Commissioner of Excess Profits Tax, which held that the High Court is not bound to answer a reference if the party who caused it to be made fails to appear or take an interest. Similarly, in Lakshmi Cotton Mfg. Co. Ltd. v. Commissioner of Sales Tax, the Supreme Court held that the High Court need not answer a question if it is academic, irrelevant, or does not dispose of the dispute.

The court concluded that the High Court is not bound to answer a reference under all circumstances. If the party who caused the reference to be made wishes to withdraw it before the hearing concludes, the High Court will not answer the question unless it would defeat a vested right of the other party.

The court also considered general principles of law regarding the withdrawal of suits, noting that a plaintiff is generally entitled to withdraw a suit unless it would defeat a vested right of the defendant. This principle was applied to tax references, allowing the party who caused the reference to be made to request its withdrawal.

The court reviewed relevant case law, including Hood Barrs v. Commissioners of Inland Revenue, which supported the view that a party can withdraw a reference before it is fully heard and argued. The court disagreed with the contrary view in Karnani Industrial Bank Ltd. v. Commissioner of Income-tax, which held that a reference must be decided unless the party fails to appear.

In conclusion, the court held that the State's request not to answer the reference should be granted as it was made before the hearing concluded and no vested right of the assessee was shown to be affected. The reference was disposed of with no order as to costs and the question left unanswered.

Final Judgment:
Reference unanswered.