Broadly framed tax reference questions may include subsidiary legal bars; High Court must reconsider the deduction issue on merits.

Under the Bihar Sales Tax Act, the Court treated the assessee's entitlement to deduction on sales to registered dealers as a question of law, despite the tax authorities' reliance on rule 18 and the Board of Revenue's view that compliance was mandatory. It also held that a broadly framed reference question could include the antecedent issue whether the Board's earlier decision barred consideration of the deduction claim, and the High Court could split that question if needed. The dismissal of the reference applications was set aside, and the High Court was directed to reconsider the reference on the merits.

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Issues: Whether the High Court was right in summarily dismissing the assessee's application for reference on the question whether its claim for deduction of sales to registered dealers was legally valid, and whether the broad question framed by the assessee could include the subsidiary question whether the earlier decision of the Board of Revenue barred consideration of that claim.

Analysis: The controversy arose under the Bihar Sales Tax Act, 1947, where the assessee claimed deduction from gross turnover for sales to registered dealers under the explanation to section 5. The tax authorities had rejected the claim for non-compliance with rule 18, and the Board of Revenue had taken the view that compliance with rule 18 was mandatory. The Court held that the question whether the assessee was entitled to the deduction was a question of law. It further held that the question framed for reference was broad enough to include the preliminary issue whether the Board of Revenue's decision barred the assessee's claim, and the High Court could, if necessary, split that broad question into separate questions for decision.

Conclusion: The High Court ought to have readmitted the tax cases and dealt with the reference in accordance with law; the assessee succeeded.

Final Conclusion: The dismissal of the reference applications was set aside and the High Court was directed to reconsider the matter on the merits of the reference question.

Ratio Decidendi: A broadly framed reference question may encompass both the substantive tax issue and any antecedent legal bar affecting its consideration, and the High Court should not refuse reference merely because such subsidiary questions are embedded within the larger question of law.

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