Appellate power under sales tax law requires merits-based disposal; dismissal for default was beyond the statutory scheme.

Rule 68(5) of the U.P. Sales Tax Rules was incompatible with section 9 of the U.P. Sales Tax Act because the appellate authority's statutory powers required a merits-based determination of the assessment, not dismissal for default. The appellate power to confirm, reduce, enhance, annul or set aside an assessment necessarily presupposed application of mind to the appeal, and the rule-making power under section 24 could not enlarge that jurisdiction by creating an additional mode of disposal. On that reasoning, dismissal of appeals for default was invalid and the appeals were to be decided on merits.

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Issues: Whether rule 68(5) of the U.P. Sales Tax Rules, which empowered the appellate authority to dismiss an appeal for default, was ultra vires section 9 of the U.P. Sales Tax Act.

Analysis: Section 9 carefully defined the appellate authority's powers and, by its express language and structure, required the appellate authority to deal with appeals by applying its mind to the assessment and to exercise only the powers specifically conferred by the Act. The power to confirm, reduce, enhance, annul, or set aside an assessment necessarily involved a hearing and a merits-based determination, especially because the appellate authority could also enhance the assessment in the larger public interest. A dismissal for default would achieve confirmation without any consideration of the merits and would amount to introducing an additional mode of disposal not contemplated by section 9. The rule-making power under section 24 could not validly enlarge the statutory appellate power by authorising dismissal in default.

Conclusion: Rule 68(5) was held to be ultra vires section 9 of the U.P. Sales Tax Act, and the orders dismissing the appeals for default were quashed with a direction that the appeals be decided on merits.

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