Natural justice requires notice and hearing before rejecting a quasi-judicial tax reference application; ex parte order quashed.

An ex parte rejection of an application for reference under section 21(1) of the Bengal Finance (Sales Tax) Act, 1941 was held to be contrary to natural justice because it was made without prior notice or an effective opportunity of hearing. The Delhi HC affirmed that even a statutory function with a judicial element must follow fair procedure, and that supervisory jurisdiction under Article 227 may be used to correct serious injustice caused by an unlawful disposal. The impugned order was quashed and the application was remitted for reconsideration and disposal in accordance with law after hearing; the sales tax reference was treated as infructuous.

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Issues: Whether the ex parte order rejecting the application under section 21(1) of the Bengal Finance (Sales Tax) Act, 1941 was liable to be quashed under Article 227 of the Constitution of India for breach of natural justice, and whether the matter should be sent back for fresh disposal in accordance with law.

Analysis: The application for reference was rejected without prior notice or opportunity of hearing. The Court held that even where the Chief Commissioner exercised a function involving a judicial element, the settled rule of fair procedure required notice and an effective hearing before disposal. The Court further held that the supervisory power under Article 227 could be exercised to keep tribunals and authorities within the bounds of their authority and to prevent serious miscarriage of justice. The ex parte rejection was therefore not a proper or lawful disposal of the application.

Conclusion: The impugned ex parte order was quashed and the application under section 21(1) was directed to be reconsidered and disposed of according to law after giving due opportunity of hearing. The sales tax reference itself was treated as infructuous.

Ratio Decidendi: A quasi-judicial or judicially toned statutory application cannot be finally rejected without prior notice and opportunity of hearing, and Article 227 can be invoked to set aside such an order where breach of natural justice causes serious injustice.

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