2026 (3) TMI 304 - HC - VAT / Sales Tax

Reference of question of law: court may decline to answer when the referring party and others show no interest.

The article addresses whether a High Court must answer a question of law referred by a Tribunal when the referring party declines to pursue the reference. ... Seeking withdrawal of the reference - hearing prerequisite for reference​​​​​​​ - allocation of taxing power between Union and State​​​​​​​ - Questions referred kept open for future decision. High Court may decline to answer a reference when the party that caused it is not interested - HELD THAT:- The Court held that although a reference is made by the Tribunal, the High Court is not obliged to answer the question of law where the party who caused the reference appears and expressly states it is not interested in the reference being answered. Citing authoritative decisions, the Court observed that a reference requires a hearing before the duty to decide arises; if the preliminary condition of hearing is not satisfied because the initiating party does not pursue the matter, the Court may decline to answer the reference. The Court declined to permit withdrawal of the reference by the initiating party but exercised its discretion to dispose of the reference by declining to answer the question and keeping the question open for consideration in an appropriate case. [Paras 7, 8] Reference declined to be answered as the party who caused it is not interested; reference disposed of with questions kept open. Questions referred kept open for future decision - Disposition of a subsequent, similarly constituted reference where the initiating party sought that the reference not be answered. - HELD THAT:- Applying the reasoning in the earlier part of the order, the Court disposed of the second reference in the same terms. Where the initiating party informed the Court it was no longer interested, the Court declined to answer the referred question and kept the legal question open for adjudication in an appropriate future case. [Paras 3] Disposed of by declining to answer the reference and leaving the question open for future adjudication. Final Conclusion: Both references were disposed of by the High Court on the ground that the parties at whose instance the Tribunal made the references were not interested in prosecution; the Court declined to answer the referred questions and left them open for consideration in an appropriate case. Issues: (i) Whether the High Court should answer a question of law referred by the Tribunal under Section 61(1) of the Bombay Sales Tax Act, 1959 when the party at whose instance the reference was made states it is not interested in the reference being answered.Analysis: The Court reviewed authorities establishing that although a reference is made by the Tribunal, the obligation to decide a question of law arises upon a hearing of the case. Where the party who caused the reference either fails to appear, appears but declines to prosecute the reference, or otherwise shows no interest in having the question answered, the preliminary condition of a hearing is not satisfied and the High Court is not bound to answer the question. The Court considered precedent holding that withdrawal as of right is not available to the party who caused the reference, but that the High Court may decline to answer the reference when there is no hearing or the parties are not interested. Applying these principles to the facts, the applicant/appellant before the Tribunal informed the Court that it was no longer interested in pursuing the reference and the revenue likewise showed no interest.Conclusion: The Court declined to answer the question(s) referred by the Tribunal and disposed of the references, keeping the questions of law open for decision in an appropriate case.