Sales tax reference on dealer status required reconsideration where barge-construction purchases raised a question of law.

The Supreme Court held that the High Court should not have refused a sales tax reference on the question whether an assessee buying materials for construction of barges used in sea transport was carrying on the business of buying goods and was a dealer within the Bombay Sales Tax Act, 1959. The issue was treated as a question of law requiring consideration on its own facts, and the earlier authority relied on by the High Court was not necessarily the most apt precedent. The refusal to direct a reference was therefore unsustainable, and the matter had to be referred for decision in light of the relevant authorities.

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Issues: Whether the High Court was right in rejecting the sales tax application for a reference on the question whether the assessee, in purchasing materials for construction of barges used in its sea transport business, was carrying on the business of buying goods and was a dealer within section 2(11) of the Bombay Sales Tax Act, 1959.

Analysis: The question raised was one of law and had to be considered on its own facts. The Court noted that the earlier decision relied upon by the High Court was not necessarily the more apposite authority and that the decision in Commissioner of Sales Tax v. D.V. Save appeared prima facie to bear closer relation to the controversy. In that situation, the refusal to direct a reference could not be sustained.

Conclusion: The High Court erred in rejecting the reference application. The question had to be referred to the High Court for decision.

Final Conclusion: The matter was restored to the reference stage, and the High Court was directed to decide the referred question in the light of the relevant authorities.

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