Merits-based disposal of tax appeals bars dismissal for default where the statute requires decision on appeal grounds.

A tribunal regulation permitting dismissal of a sales tax appeal for default of appearance was held inconsistent with the statutory appellate scheme requiring disposal of the appeal on its grounds under section 36(3). The court noted that the Act contemplated merits-based adjudication, preserved the assessee's revisional remedy, and allowed the State to seek enhancement in an assessee's appeal. Because dismissal for default does not decide the subject-matter of the appeal, it was beyond the regulation-making power. The provision for readmission did not cure the defect, since the inconsistency arose from the initial authority to dismiss for non-appearance. The regulation and consequential dismissal and refusal of restoration were therefore invalid.

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Issues: Whether regulation 9(1) of the Tamil Nadu Sales Tax Appellate Tribunal Regulations, 1959, authorising dismissal of an appeal for default of appearance, is ultra vires section 36(3) of the Tamil Nadu General Sales Tax Act, 1959, and whether orders dismissing the appeals for default and refusing restoration were valid.

Analysis: The appeal provisions of the Act required the Appellate Tribunal to dispose of the appeal in accordance with section 36(3) by deciding it on the grounds of appeal and not by terminating it for non-appearance. The statutory scheme preserved the assessee's right to a merits-based adjudication and the further revisional remedy, and also enabled the State to seek enhancement in an appeal filed by the assessee. A dismissal for default was held to be inconsistent with that scheme because it did not amount to a decision on the subject-matter of the appeal. The existence of a readmission provision in regulation 9(2) did not cure the inconsistency, since the defect lay in the power to dismiss the appeal for default in the first instance.

Conclusion: Regulation 9(1) was held to be inconsistent with section 36(3) of the Act and therefore invalid, and the orders dismissing the appeals for default and refusing restoration were also invalid.

Ratio Decidendi: Where the statute requires the appellate tribunal to dispose of an appeal on the merits, a regulation enabling dismissal for default of appearance is ultra vires because it permits disposal otherwise than on the appeal's subject-matter.

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