Factual inference on suppressed sales and penalties prevented a legal reference under the Gujarat Sales Tax Act, 1969.

Estimation of suppressed sales and levy of penalties under the Gujarat Sales Tax Act, 1969 were held to rest on concurrent factual findings from the assessee's books and stock verification, showing that all sales and purchases for the year had not been recorded or disclosed. The estimate of escaped turnover was treated as a factual inference from the evidence, with no legal principle shown to have been applied. The challenge to penalties likewise depended on those factual findings. The High Court therefore held that the referred questions were questions of fact, not questions of law, and declined to answer the reference.

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Issues: (i) Whether the referred questions on estimation of suppressed sales and imposition of penalties under the Gujarat Sales Tax Act, 1969 raised questions of law fit for answer under section 69.

Analysis: The authorities had concurrently found from the assessee's account books and stock verification that not all sales and purchases for the relevant year had been recorded or disclosed. The estimate of escaped turnover was based on factual inference drawn from the evidence on record, and no legal principle was shown to have been applied in making that estimate. The same was true of the challenge to the penalties, which depended on the factual findings already recorded.

Conclusion: The referred questions were questions of fact and not questions of law, so the reference was declined and no answer was given.

Final Conclusion: The reference was disposed of without answering the questions referred to the Court.

Ratio Decidendi: A reference court will decline to answer questions that are purely factual in nature and do not involve the application of any legal principle.

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