Tax and interest reference questions arise where liability depends on unsettled legal classification and statutory incidence.

A question becomes referable where liability depends on the legal incidence of tax or interest and the governing point of law remains unsettled. On interest under section 11-D of the Punjab General Sales Tax Act, the controversy over the effect of additional demand in revision and the point from which interest accrues was treated as a question of law. On cotton-seed oil, the dispute whether it was edible oil taxable at 1 per cent or non-edible oil taxable at 4 per cent likewise involved a legal classification issue requiring authoritative determination. Both questions were directed to be referred to the Court.

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Issues: (i) Whether the question relating to levy of interest under section 11-D of the Punjab General Sales Tax Act, 1948 arose for reference, and from which point of time such interest could be charged; (ii) Whether the question relating to the rate of tax on cotton-seed oil, namely whether it was edible oil taxable at 1 per cent or non-edible oil taxable at 4 per cent, arose for reference.

Issue (i): Whether the question relating to levy of interest under section 11-D of the Punjab General Sales Tax Act, 1948 arose for reference, and from which point of time such interest could be charged.

Analysis: The controversy on interest depended on the legal effect of the additional demand created in revision and on the point of time from which liability to interest would arise. The issue was not purely factual and was capable of being examined as a question of law in light of the governing statutory provisions and the cited authorities.

Conclusion: The question relating to interest under section 11-D was held to give rise to a referable question of law.

Issue (ii): Whether the question relating to the rate of tax on cotton-seed oil, namely whether it was edible oil taxable at 1 per cent or non-edible oil taxable at 4 per cent, arose for reference.

Analysis: The rate of tax turned on the legal character of cotton-seed oil as edible or non-edible. Since the correctness of the earlier view treating cotton-seed oil as edible oil was under challenge and the question had not attained finality, the dispute involved a substantial question of law requiring reference.

Conclusion: The question whether cotton-seed oil was edible oil taxable at 1 per cent was held to be a referable question of law.

Final Conclusion: The Tribunal was directed to refer both questions of law to the Court, and the petitioner's request for reference was accepted.

Ratio Decidendi: A question is referable where the dispute turns on the legal incidence of tax or interest and the point of law remains unsettled or subject to authoritative determination.

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