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TMI Blog1982 (1) TMI 169X X X X Extracts X X X X X X X X Extracts X X X X ..... tion need not be answered. Ordinarily, upon this statement being made, the matter would have been treated as having concluded and all that we would have been required to do was to record that since the applicant declares that it does not pursue the reference, the question is not required to be answered. However, Mr. R.D. Pathak, the learned Advocate appearing on behalf of the opponentassessee, submitted that once a case is stated in respect of a question, the party at whose instance the case is stated is not entitled to abandon the proceeding unilaterally and to state that the question need not be answered as it is not pressed and that it is within the discretion of the court, even under such circumstances, to consider and decide whether or not to answer the question, and in exercising the discretion, the court is required to take into account all the relevant circumstances, and for that purpose, to afford a hearing to the partyopponent. In support of this submission, Mr. Pathak invoked the aid of the decisions in Karnani Industrial Bank Ltd. v. Commissioner of Income-tax [1956] 30 ITR 16 and K. Ch. Venkataratnam v. Commissioner of Gift-tax [1974] 95 ITR 277. Before considering t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the signature of the Registrar, and the Tribunal shall dispose of the case accordingly. (5) Where a reference is made to the High Court under this section, the costs including the disposal of the fee referred to in sub-section (1) shall be in the discretion of the court. (6) The payment of the amount of tax, if any, due in accordance with the order of the Tribunal in respect of which an application has been made under sub-section (1) shall not be stayed pending the disposal of such application or any reference made in consequence thereof, but if such amount is reduced as the result of such reference, the excess tax paid shall be refunded in accordance with the provisions of section 43." Section 61, sub-section (1), confers upon any person, who is aggrieved by an order of the Tribunal passed in appeal or revision, which affects his liability to pay tax or penalty or to forfeiture of any sum or affects the recovery from him of any amount under section 39, as well as upon the Commissioner, the right to move the Tribunal by an application in writing to refer to the High Court any question of law arising out of such order. The sub-section further provides that where the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal on the merits of the said question. The stage for the consideration of the said aspect will be reached only when the High Court deals with the case under sub-section (4). Sub-section (3) empowers the High Court, where it is not satisfied that the statement in the case which is referred is sufficient to enable it to determine the question raised thereby, to refer the case back to the Tribunal to make such additions thereto or alterations therein as the High Court may direct in that behalf. Under this sub-section although the case is referred back to the Tribunal, there is no decision on the merits of the case. All that the High Court does is to call upon the Tribunal to re-submit the case with an additional or or revised statement of the case. Sub-section (4), which has direct relevance so far as the question under consideration is concerned, provides that "upon the hearing of any such case", the High Court shall: (1) decide the question of law raised thereby, (2) deliver its judgment theron containing the grounds on which the decision is founded and (3) send to the Tribunal a copy of such judgment. The sub-section further enacts that the Tribunal shall thereupon dispose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the court any such obligation. It seems to me that before the duty contemplated by the section to decide the questions of law referred can arise, a hearing of the case must take place, because the section opens with the words: 'The High Court upon the hearing of any such case' etc. Where the party, who has caused the reference to be made and who is in the position of a plaintiff, fails to appear, no hearing of the case can take place and in my view since the preliminary condition of the sub-section is not satisfied in such a case, the consequent obligation of deciding the questions of law and delivering a judgment does not also arise." This decision clearly supports the view which we have taken above, namely, that the obligation to answer the question arises only upon the hearing of any case and by hearing, what is meant is full, effective and complete hearing. Even in cases where there has been a full hearing of the case, however, it is not as if there is no discretion in the High Court to refuse to answer the question. Reference may be made in this behalf to the decision in Lakshmi Cotton Mfg. Co. Ltd. v. Commissioner of Sales Tax, Bombay [1970] 26 STC 263 (SC). The Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal is not to be stayed pending the disposal of the application under sub-section (1) or any reference made in consequence thereof and that if such amount is reduced as the result of the reference, the assessee will be entitled to a refund of the excess sum paid in accordance with law. This would indicate that while the application under sub-section (1) or the reference pursuant thereto is pending, the order of the Tribunal is not to be treated as having become inoperative, in so far as it creates the liability to pay tax. The order of the Tribunal will remain operative, unless stayed by a competent court, subject, however, to the right, if any, arising in a party to claim refund in case it is ultimately found that the tax paid pursuant to the order of the Tribunal is in excess of what could be legitimately charged. The statutory provisions analysed above enact no bar, express or implicit, against the abandonment midstream of the reference by the person at whose instance it is made. He is the person who has caused the reference to be made and he is in the position of a plaintiff. He is at the centre of the stage and incharge of the proceeding. The choice of not seeking adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ff applied for withdrawal of the suit. It was held that there was no ground on which the court could refuse to allow withdrawal of the suit because no vested right in favour of the defendant had come into existence at the point of time when withdrawal was sought. In R. Ramamurthi Aiyar v. Rajeswararao AIR 1973 SC 643, the suit was for partition of a cinema which the parties owned in equal shares. One of the prayers in the suit was that the court in exercise of its inherent jurisdiction should direct the property to be sold by public auction and pay the plaintiff his one-half share in the net proceeds because the property, having regard to its nature, could not be divided into two halves by metes and bounds. The defence was that the said property was capable of division by metes and bounds into two shares and that the plaintiff was not entitled to a decree for sale. The alternative contention was that the defendant was ready and willing to buy the plaintiff's share and that, therefore, a valuation of the plaintiff's share should be made and the said share should be offered in sale to the defendant. The court appointed a Commissioner whose report indicated that he had considerable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... general law is that the plaintiff being the dominus litis is entitled to withdraw the suit unless the withdrawal has the result of defeating a vested right which has come into existence in favour of the defendant before the prayer for withdrawal is made. If any such right has come into existence, the court is not bound to allow the withdrawal. Although a tax reference is not a suit and it is not, in terms, governed by the provisions contained in the Code of Civil Procedure relating to withdrawal of a suit and the request of the party at whose instance the reference is made that the answer to the question referred need not be recorded as the question is not pressed may not strictly amount to the withdrawal of a reference, there is no reason why the principle underlying those provisions cannot be applied when such party does not press the question of law and requests that it need not be answered. Such request will ordinarily have to be entertained and granted unless it is shown that though the request is made before the hearing has concluded, the granting of such request would defeat the vested right, if any, acquired by the other party. Barring such an exceptional case, there wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant can select the year upon which he will appeal and the grounds upon which he will appeal, except, of course, that in appeals from the Commissioners he can only appeal upon questions of law. Subject to that, it seems to me that the ordinary rules must apply and therefore he is entitled to ask the Special Commissioners to state a case in respect only of the years which he chooses. That being so, and the appellant having given due notice that he was going to take this point before the appeal came on, it seems to me right that I should let him now, before the case has been fully heard and argued, withdraw such years in respect of which he does not desire to appeal." (underlining supplied*). This decision, though rendered in the context of the English taxing statute, has a considerable bearing on the question in hand. The decision is an authority for the proposition that once a case is stated, the rules governing the ordinary litigation are attracted and become applicable and that, therefore, the party at whose instance the case is stated is entitled to withdraw the case wholly or in respect of such years in regard to which he does not want the decision before the case is fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and have brought it to our notice that the question has now been finally determined against the contention of the assessees by the highest court of the country. In the circumstances the only order which we can possibly make is an order in accordance with our previous decision now affirmed by the Supreme Court." In this view of the matter, the question was answered in conformity with the previous decision which was meanwhile affirmed by the Supreme Court. This decision was considered by the Andhra Pradesh High Court in K. Ch. Venkataratnam v. Commissioner of Gift-tax [1974] 95 ITR 277. In that case, the reference under the Gift-tax Act, 1958, was at the instance of the assessee and at the hearing it was stated on behalf of the assessee that he was not interested in pursuing the matter and that he would like to withdraw the reference. The Andhra Pradesh High Court, in this connection, observed that it was settled by a number of decisions that the court may decide not to answer a reference if the party fails to appear or does not take any interest in the matter. It was further observed that the same principle had been applied to a case where the party appeared and stated that it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1974] 95 ITR 277 is concerned, we respectfully agree with the view therein expressed that when the party at whose instance the reference is made states that he wishes to withdraw the reference, it means that he does not take any interest in the matter and that, therefore, it would fall within the principle enunciated in a number of decisions that, under such circumstances, the court has the power to decline to answer the reference. We also respectfully agree that in such circumstances it is left to the court, having regard to the circumstances of the case, either to accede to the party's request and decide not to answer the reference or to proceed to answer the reference in spite of such a request, subject to the rider, however, that where such request is made before the reference is fully heard and argued, the court will have to accede to the request unless it is manifest that the acceptance of the request would amount to defeating, in some sort, a vested right, if any, which has come into existence in favour of the other party. In view of the foregoing discussion, we are of the view that in the instant case the State is entitled to request that the reference should not be an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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