Referable question of law under sales tax reference provisions excludes factual disputes and distinct penalty liability

The Madhya Pradesh High Court reiterated that a reference under section 44 of the M.P. General Sales Tax Act requires a referable question of law, not a dispute turning only on facts. It noted that earlier Division Bench rulings had already held that the burden of proving entitlement to tax exemption lies on the assessee, while liability to penalty for contravention is a distinct issue. On the facts, even alleged defects in account maintenance would at most affect acceptance of accounts or best judgment assessment and would not, by themselves, establish penalty under section 8(2). No referable question of law arose, so reference was declined.

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Issues: Whether the Revenue had shown any question of law arising from the Tribunal's order so as to justify a reference under section 44 of the M.P. General Sales Tax Act, 1958.

Analysis: The Tribunal had deleted the penalty under section 8(2) and the reference applications were rejected because the matter was found to rest on findings of fact. The Court noted that the same legal questions had already been answered against the Revenue in earlier Division Bench decisions, which held that the burden of proving entitlement to tax exemption lies on the assessee, but the question of penalty for contravention is distinct from the exemption claim. It was further recognised that even if accounts were not maintained in the manner suggested by the Revenue, the consequence would at most affect acceptance of accounts and best judgment assessment, and would not by itself establish liability to penalty under section 8(2).

Conclusion: No referable question of law arose. The request to call for a reference was declined and the petitions were rejected.

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