Reference on merits required where the record contains sufficient factual basis to answer the referred tax question.

Where a reference is made in compliance with a specific judicial direction and the record already contains sufficient factual material, the High Court must answer the referred question on merits. The assessment and appellate orders contained details of incidental expenses, including market fee, dami and labour charges, and their treatment in taxable turnover, so the High Court should not have declined to decide the first question on the ground that no factual basis existed. The proper course was to hear both sides and determine the reference on merits. The matter therefore required reconsideration and decision on the substantive issue.

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Issues: Whether the High Court was justified in returning unanswered the first question referred by the Sales Tax Tribunal on the ground that no factual basis existed for deciding it, despite the earlier direction to make a reference and the material available in the assessment and appellate orders.

Analysis: The reference had been made pursuant to a specific judicial direction requiring the Tribunal to state a case and refer the questions for opinion. The assessment order and the appellate order contained the relevant factual material concerning incidental expenses, including market fee, dami and labour charges, and their treatment in the taxable turnover. In these circumstances, the High Court ought not to have declined to answer the first question on the premise that no factual foundation existed. The proper course was to decide the reference on merits after hearing both sides.

Conclusion: The High Court was not justified in returning the first question unanswered, and the matter required reconsideration and decision on merits.

Ratio Decidendi: Where a reference is made in compliance with a specific direction and the record contains sufficient factual material to answer the question, the High Court must decide the reference on merits and should not refuse to answer it for want of factual basis.

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