Reference jurisdiction under sales tax law is limited to fiscal liability issues, not questions bearing only on possible prosecution.

Under the Bombay Sales Tax Act reference jurisdiction, a question of law is referable only if it arises from the Tribunal's order and affects liability to tax, penalty, forfeiture, or specified recovery. The Bombay HC held that a question relevant only to the possibility of prosecution does not satisfy that statutory test. On the facts, the disputed finding concerned whether a collection contravened section 9A, but forfeiture and penalty were already unavailable, and the issue was not referable merely because it might assist prosecution. The Court also noted that the Tribunal had decided the matter on merits by holding that no tax collection could arise where the transactions were not sales.

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Issues: Whether a reference under section 61(1) of the Bombay Sales Tax Act, 1959, read with section 9(2) of the Central Sales Tax Act, 1956, lay on a question which affected only the possibility of prosecution and not liability to tax, penalty or forfeiture.

Analysis: The reference provision permits a question of law to be referred only if it arises out of the Tribunal's order and affects liability to pay tax or penalty, or liability to forfeiture, or recovery under the specified provision. The challenge pressed before the Court concerned only the Tribunal's finding that the disputed collection would not amount to a contravention of section 9A, in the context where forfeiture and penalty were already unavailable. The Court held that even if the department wished to use the finding for possible prosecution, that consequence did not fall within the statutory scope of reference jurisdiction. The Tribunal's decision was also not academic, because it had decided the matter on merits by holding that where the transactions were not sales, no collection of tax under section 9A could arise.

Conclusion: No reference lay on the issue pressed, as it did not affect liability to tax, penalty or forfeiture, and the application was liable to fail.

Final Conclusion: The Court confined the statutory reference jurisdiction to questions bearing on fiscal liability or forfeiture and declined to extend it to a question relevant only to prosecution; the application was dismissed.

Ratio Decidendi: A question of law is referable under the applicable sales tax reference provision only if it affects liability to tax, penalty, forfeiture, or recovery, and not merely because it may bear upon a possible prosecution.

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