1970 (10) TMI 55 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Vires of Rule 59(2) of the Punjab General Sales Tax Rules, 1949.
2. Power of the appellate authority to dismiss an appeal in default.
3. Requirement for the appellate authority to dispose of appeals on merits.

Detailed Analysis:

1. Vires of Rule 59(2) of the Punjab General Sales Tax Rules, 1949:
The petition challenged the constitutionality of Rule 59(2) of the Punjab General Sales Tax Rules, 1949. The primary contention was that Rule 59(2), which allows the appellate authority to dismiss an appeal in default, is repugnant to Section 20(6) of the Punjab General Sales Tax Act, 1948. The court held that Rule 59(2) is inconsistent with Section 20(6) of the Act, which mandates that the appellate authority must dispose of every appeal on its merits. The expression "pass such order on appeal as it deems to be just and proper" in Section 20(6) implies that a decision must be rendered on the merits of the appeal, not merely dismissed for non-appearance.

2. Power of the Appellate Authority to Dismiss an Appeal in Default:
The court examined whether the appellate authority has the power to dismiss an appeal in default under the Act. It was contended by the petitioners that the appellate authority is bound to dispose of the appeal on merits, regardless of the appellant's presence. The court agreed with this contention, stating that an order dismissing an appeal in default cannot be considered just or proper. The court referenced the Supreme Court's decision in Commissioner of Income-tax, Madras v. S. Chenniappa Mudaliar, which held that the Tribunal must dispose of an appeal on merits and not merely dismiss it for non-appearance.

3. Requirement for the Appellate Authority to Dispose of Appeals on Merits:
The court emphasized that the statutory duty of the appellate authority includes ensuring that the tax legally leviable under the Act does not escape assessment due to any erroneous order by subordinate authorities. The court held that the appellate authority must examine the correctness of the points decided by the departmental authorities in light of the submissions made by the appellant. This duty persists even if the appellant or their counsel fails to appear on the date of hearing. The court found that dismissing an appeal in default would render the provisions of Section 22, which allows for a reference to the High Court on questions of law, nugatory because there would be no decision on merits to refer.

Conclusion:
The court concluded that:
- Rule 59(2) of the Punjab General Sales Tax Rules, 1949, is ultra vires and repugnant to Section 20(6) of the Punjab General Sales Tax Act, 1948.
- The appellate authority does not have the power to dismiss an appeal in default and must dispose of the appeal on merits.
- The orders of the Presiding Officer, Sales Tax Tribunal, Punjab, dated 8th April 1968, and 6th August 1968, were quashed, and the case was remanded to the Tribunal to decide the appeal in accordance with the law.

Petition allowed.