Quasi-judicial refusal of tax reference requires a hearing before adverse action can be taken

The Board of Revenue, when considering an application for reference under section 21(1) of the Bengal Finance (Sales Tax) Act, 1941, had to act fairly because its refusal could affect civil rights and create an adverse order. The power was therefore quasi-judicial in character, and the assessee was entitled to be heard before any refusal of reference. The refusal also had to be supported by reasons, since the assessee could challenge it before the High Court. On that basis, the Board could not reject the reference application without hearing the assessee.

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Issues: Whether the Board of Revenue, while dealing with an application for reference under section 21(1) of the Bengal Finance (Sales Tax) Act, 1941, was bound to hear the assessee before refusing reference, and whether it acted as a quasi-judicial authority in doing so.

Analysis: The application for reference arose out of an order under section 20(3), against which the assessee had a statutory right to seek reference of a question of law to the High Court. The refusal to refer was required to be supported by reasons, and the assessee was entitled to challenge such refusal before the High Court. In that setting, the power exercised under section 21(1) affected civil rights and could result in an adverse order. The Board was therefore required to act fairly and could not pass an adverse order without hearing the assessee. The statutory scheme showed that the Board was discharging a quasi-judicial function while considering the request for reference.

Conclusion: The Board of Revenue was bound to hear the assessee before refusing reference under section 21(1), and the petitioner's challenge succeeded.

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