1963 (9) TMI 44 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Interpretation of Section 9 of the U.P. Sales Tax Act.
2. Validity of Rule 68(5) of the U.P. Sales Tax Rules.
3. Powers of the appellate authority to dismiss an appeal for default.
4. Inherent powers of judicial and quasi-judicial bodies.
5. Applicability of principles from the Income-tax Act and English law.

Detailed Analysis:

1. Interpretation of Section 9 of the U.P. Sales Tax Act:
The central question was whether Section 9 of the U.P. Sales Tax Act permits the Judge (Appeals) to dismiss an appeal for default or mandates that every appeal must be disposed of on its merits. The court noted that Section 9 outlines the powers of the appellate authority, including confirming, reducing, enhancing, or annulling the assessment, but does not explicitly mention the power to dismiss an appeal for default. The court emphasized that the legislative intent was to ensure that the appellate authority acts in the larger public interest, considering both the interests of the assessee and the state's revenue. The provision's language suggests that the appellate court must deliberate on the merits of each appeal, thus ruling out the dismissal of appeals for default.

2. Validity of Rule 68(5) of the U.P. Sales Tax Rules:
The petitioner challenged Rule 68(5) on the grounds that it allows the appellate court to dismiss an appeal for default, which was argued to be inconsistent with Section 9 of the Act. The court examined whether Rule 68(5), framed under Section 24 of the Act, was ultra vires. It concluded that if Section 9 mandates the disposal of appeals on their merits, then Rule 68(5), which permits dismissal for default, exceeds the rule-making authority's powers and is inconsistent with the Act. Consequently, Rule 68(5) was declared ultra vires.

3. Powers of the Appellate Authority to Dismiss an Appeal for Default:
The court scrutinized whether the appellate authority has the inherent power to dismiss an appeal for default. It was argued that the power to confirm an assessment inherently includes the power to dismiss an appeal for default. However, the court held that the word "confirm" implies a deliberate application of the mind, which cannot be achieved by an automatic dismissal for default. The court reasoned that if the appellate authority is required to consider the merits of an appeal, then dismissing it for default without such consideration would be inconsistent with the statutory mandate.

4. Inherent Powers of Judicial and Quasi-Judicial Bodies:
The court addressed the argument that judicial and quasi-judicial bodies have inherent powers, including the power to dismiss for default. It referenced cases under the Income-tax Act and English law, noting that while appellate bodies under those statutes might have broader inherent powers, the specific provisions of Section 9 of the U.P. Sales Tax Act limit the appellate authority's powers to those explicitly stated. The court concluded that the appellate authority under the Sales Tax Act does not possess inherent powers to dismiss appeals for default, as this would contradict the legislative intent.

5. Applicability of Principles from the Income-tax Act and English Law:
The court considered whether principles from the Income-tax Act and English law could be applied to interpret Section 9 of the U.P. Sales Tax Act. It noted that while Section 9 is analogous to Section 31 of the Income-tax Act, the latter does not contain a provision similar to the second proviso of Section 9(1) of the Sales Tax Act, which restricts the appellate authority's powers. The court also discussed the case of Commissioner of Income-tax, Punjab v. Nawab Shah Nawaz Khan and the English case of R. v. Income Tax Special Commissioners; Ex parte Elmhirst, concluding that the principles from these cases support the view that an appellate authority must consider the merits of an appeal and cannot dismiss it for default.

Conclusion:
The court held that the appellate authority under the U.P. Sales Tax Act must dispose of appeals on their merits and does not have the power to dismiss them for default. Consequently, Rule 68(5) of the U.P. Sales Tax Rules was declared ultra vires. The orders of the appellate and revisional authorities dismissing the appeals for default were quashed, and the Judge (Appeals) was directed to dispose of the appeals on their merits. The petition was allowed with costs.