Scope of business under sales tax law required a reference on whether machinery and spare parts sales were incidental to manufacturing business.

The scope of "dealer", "business", "turnover" and "sale price" under the Rajasthan Sales Tax Act, 1954 governed whether sales of old machinery, iron and steel defectives, and spare parts were transactions connected with, or incidental or ancillary to, the assessee's manufacturing business. A substantial question of law arose from the Board's order, and the High Court's task at the reference stage was only to decide whether such a question existed under section 15(1). Refusing a reference on the ground that the matter was already covered was erroneous, because the High Court could not determine the question without a reference from the Board. The refusal to make a reference was therefore illegal, and a reference was directed.

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Issues: Whether the High Court was justified in refusing to direct the Board of Revenue to state a case and refer the question whether the sale of old machinery, iron and steel defectives, and spare parts formed part of the assessee's business under the Rajasthan Sales Tax Act, 1954.

Analysis: The controversy turned on the scope of the statutory definitions of "dealer", "business", "turnover", and "sale price" under the Rajasthan Sales Tax Act, 1954, and on whether the disputed sales were transactions in connection with, or incidental or ancillary to, the assessee's manufacturing business. A substantial question of law arose from the Board's order, and the High Court was required only to determine whether such a question existed for reference under section 15(1). The refusal to direct a reference on the footing that the matter was already covered was held to be erroneous, and the High Court could not decide the question without a reference from the Board.

Conclusion: The refusal to make a reference was illegal, and the assessee succeeded in obtaining a direction that the Board of Revenue state the case and refer the question of law to the High Court.

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