Composite contract characterization requires High Court reference where bifurcation of service obligations raises a substantial question of law.

The characterization of a composite arrangement as a works contract or as separable contracts of service raised a substantial question of law where the Tribunal treated franking and mailing of balance sheets and annual reports as an independent service despite both obligations arising from the same document. That bifurcation and its tax consequences required High Court examination. The Tribunal's refusal to refer the question was therefore unsustainable, and it had to forward the question of law for the High Court's opinion.

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Issues: Whether the Tribunal was justified in refusing to refer the stated question of law to the High Court under the sales tax reference procedure.

Analysis: The Tribunal had treated the job-work of franking and mailing the balance sheets and annual reports as an independent contract of service distinct from the works contract, even though both obligations arose from the same document. The Court found that this treatment raised a substantial question of law, because the legality of the alleged bifurcation of a composite arrangement and the consequent tax treatment of postal charges required examination by the High Court.

Conclusion: The refusal to make the reference was unsustainable, and the Tribunal was required to forward the question of law for opinion of the High Court.

Ratio Decidendi: Where the characterization of an arrangement as a composite works contract or as separable contracts of service gives rise to a substantial question of law, the reference authority must refer the question for the High Court's opinion rather than dismiss the reference application.

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