Limitation and taxability of schedule-listed tax-free goods were held to raise referable questions of law.

Limitation under section 11(5) of the Punjab General Sales Tax Act, 1948, and the leviability of sales tax on dori, wicks and textile goods described as tax-free items in Schedule 'B' were treated as questions of law. The Court noted that the limitation objection required examination of whether the assessment proceedings and final assessment fell within the statutory five-year period, while the taxability issue turned on the legal effect of the goods being classified as tax-free. On that basis, both matters were held fit for reference, and the Tribunal was directed to state the case on the two questions.

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Issues: (i) Whether the assessment for the year 1981-82 was time-barred under section 11(5) of the Punjab General Sales Tax Act, 1948, and therefore required reference as a question of law. (ii) Whether sales tax was leviable on the assessee's sales of dori, wicks and textile goods, stated to be tax-free items in Schedule 'B' to the Act, and therefore required reference as a question of law.

Issue (i): Whether the assessment for the year 1981-82 was time-barred under section 11(5) of the Punjab General Sales Tax Act, 1948, and therefore required reference as a question of law.

Analysis: The Court noted that the assessee's objection on limitation raised a legal issue because the assessment proceedings had to be examined against the statutory five-year period. On the facts pleaded, the question whether the proceedings had commenced within time and whether the assessment ultimately made was barred by limitation could not be rejected as lacking a legal basis.

Conclusion: The question on limitation was held to be a referable question of law.

Issue (ii): Whether sales tax was leviable on the assessee's sales of dori, wicks and textile goods, stated to be tax-free items in Schedule 'B' to the Act, and therefore required reference as a question of law.

Analysis: The Court found that the assessee's contention that the goods dealt in were tax-free items and that no taxable sales could be presumed on the material before the Assessing Authority also raised a substantive legal question. The matter required determination on the legal effect of the goods being described as tax-free under Schedule 'B'.

Conclusion: The question on leviability of sales tax was held to be a referable question of law.

Final Conclusion: The application succeeded and the Tribunal was directed to state the case and refer the two identified questions of law for opinion.

Ratio Decidendi: A question that turns on limitation or on the legal leviability of sales tax on allegedly tax-free goods, when supported by the pleadings and record, is fit to be referred as a question of law.

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