2003 (2) TMI 457 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Whether an ex parte order passed by the Trade Tax Tribunal can be recalled under section 22 of the U.P. Trade Tax Act, 1948, and the scope of jurisdiction under section 22.
2. If rectification under section 22 of an ex parte order passed in second appeal is not permissible, whether the Tribunal has jurisdiction to recall the ex parte order.

Issue-wise Detailed Analysis:

1. Whether an ex parte order passed by the Trade Tax Tribunal can be recalled under section 22 of the U.P. Trade Tax Act, 1948, and the scope of jurisdiction under section 22:

The revision was filed against the order dated January 20, 2003, by the Trade Tax Tribunal, Varanasi. The primary issue was whether the Tribunal could recall an ex parte order under section 22 of the U.P. Trade Tax Act, 1948. The revisionist's counsel argued that the Tribunal had jurisdiction to recall such orders and erred in rejecting the application under section 22. Section 22 allows the Tribunal to rectify any mistake in its order apparent on the record within three years. The term "mistake" is defined as an obvious and patent mistake, not requiring extensive reasoning or debate.

Section 10 of the Act mandates the Tribunal to give a reasonable opportunity for hearing before passing an order. Rule 68 of the U.P. Trade Tax Rules, 1948, outlines the procedure for hearing appeals, emphasizing that appeals should be heard on fixed dates with proper notice to the parties. If the Tribunal fails to follow these procedures, it constitutes an apparent mistake that can be rectified under section 22. However, if due notice was given and the Tribunal followed the prescribed procedure, an ex parte decision does not constitute an apparent mistake.

In the present case, the Tribunal had issued due notice, and the revisionist's counsel noted the date but failed to appear due to illness. The application under section 22 did not demonstrate any apparent mistake on the record, leading to the Tribunal's rejection of the application.

2. If rectification under section 22 of an ex parte order passed in second appeal is not permissible, whether the Tribunal has jurisdiction to recall the ex parte order:

The U.P. Trade Tax Act, 1948, and the U.P. Trade Tax Rules, 1948, do not explicitly provide for recalling an ex parte order. However, section 10(5) requires the Tribunal to pass orders after giving a reasonable opportunity for hearing. An order passed without such opportunity is contrary to this mandate. The Tribunal must have the inherent power to recall an ex parte order if a party shows sufficient cause for non-appearance.

The Supreme Court and various High Courts have recognized that Tribunals possess inherent powers to set aside ex parte orders to ensure justice. The Division Bench of the Allahabad High Court and the Orissa High Court have supported the view that Tribunals can recall ex parte orders even without explicit statutory provisions. The Supreme Court in Grindlays Bank Ltd. v. Central Government Industrial Tribunal and J.K. Synthetics Ltd. v. Collector of Central Excise affirmed that Tribunals have the inherent power to set aside ex parte orders to secure the ends of justice.

In the present case, although the power under section 22 could not be exercised for rectification, the Tribunal should consider the application for recalling the ex parte judgment on merits. The Tribunal's failure to exercise this inherent jurisdiction resulted in the setting aside of the order dated January 20, 2003, and the direction to reconsider the application on merits.

Conclusion:

The Trade Tax Tribunal has jurisdiction to set aside an ex parte order and re-hear the matter. The absence of explicit provisions does not inhibit the Tribunal from recalling such judgments. The Tribunal should consider the application for recall on merits to ensure justice. The revision is allowed to the extent indicated, and the Tribunal is directed to reconsider the application for recall of the ex parte judgment.

Petition allowed.