2024 (7) TMI 1391 - HC - VAT and Sales Tax

Appeal dismissed for non-appearance rather than decided on merits under Rule 63(4) VAT Rules

M/s Rajdhani Arms Corporation, Lucknow Thru. Propreitor, Seema Sarna Versus Commissioner of Commercial Tax U.P., Commercial Tax Bhawan, Lucknow

The Allahabad HC held that when an appellant fails to appear before the Commercial Tax Tribunal, the appeal should be dismissed for want of prosecution ... Decision of appeal ex-parte - whether in absence of counsel of the revisionist/appellant, the Commercial Tax Tribunal can proceed to consider and decide the appeal 'ex parte' in absence of the revisionist/appellant? - violation of principles of natural justice - HELD THAT:- This Court is of the considered view that where the appellant does not appear before the Tribunal, the appeal should be dismissed for want of prosecution rather than deciding the same on merits. Proviso to Rule 63 (4) of the U.P. Value Added Tax Rules, 2008 provides that if despite proper service of the notice either party is not present, the appeal may be heard and decided ex parte. The aforesaid proviso though on the face of it provides that in absence of a party to the proceedings, the appeal can be decided by the Tribunal on merits, but the word 'ex parte' used in the proviso can be interpreted as 'want of appearance on behalf of the opposite party/defendant' and not the appellant/plaintiff - the word 'ex parte' can be given its natural meaning as appearing in the Code of Civil Procedure and certainly the Tribunal can proceed to consider and decide the case ex parte in a situation where only the appellant appears, but the respondent/State does not appear, while in a case, where the appellant does not appear, the only consequence of such a situation would be to dismiss the appeal for want of prosecution and not to enter and decide the case on merits of the controversy. The other concern raised was that there is no provision for setting aside the ex parte order in such a situation where the Tribunal proceeds to allow the appeal ex parte in absence of the defendant. In this regard, reliance was placed upon a judgement of a Coordinate Bench of this Court passed in M/s Ram Sewak Coal Depot, Deori, Mirzapur Vs. The Commissioner of Trade Tax, U.P, Lucknow [2003 (2) TMI 457 - ALLAHABAD HIGH COURT], wherein interpreting the provisions of Section 22 of the U.P. Value Added Tax Act, 2008, which is pari materia with provision of Section 31 of the U.P. Value Added Tax Act, 2008, which provides for rectification, this Court has held that wherein an appeal is decided ex parte, it shall be open for moving an application for rectification of such a situation. Accordingly, adequate reasons are given for the defendant for non appearance and judgement is rendered ex parte, but recall of order, exercise of rectification has been provided under Section 31 of the U.P. Value Added Tax Act, 2008. The impugned order dated 07.09.2017, whereby the Tribunal has proceeded to decide the appeal preferred by the revisionist in his absence, is held to be illegal and arbitrary and accordingly set aside and the matter is remitted back to the Tribunal to decide the matter afresh after affording an opportunity of hearing to the parties - Revision disposed off. Issues:Challenge to order of Commercial Tax Tribunal on grounds of ex parte decision without appearance of appellant, Interpretation of Code of Civil Procedure rules regarding appearance in court, Compliance with U.P. Value Added Tax Rules for ex parte decisions, Legality of Tribunal's decision to proceed ex parte, Provisions for setting aside ex parte orders.Analysis:The judgment involves a challenge to the order of the Commercial Tax Tribunal where the appellant's counsel did not appear, leading to an ex parte decision. The revisionist argued that the Tribunal should have dismissed the appeal in default rather than proceeding to decide on merits without the appellant's presence. The revisionist cited the Code of Civil Procedure, specifically Order IX Rule 6(1)(a), Order IX Rule 8, and Order XLI Rule 17, to support the contention that in the absence of the appellant, the appeal should be dismissed for want of prosecution.The revisionist further relied on a Supreme Court judgment highlighting the importance of dismissing appeals for non-prosecution when the appellant does not appear. The Supreme Court emphasized that appeals should not be decided on merits in such situations. The Court emphasized the need for fair hearings and clear reasons for decisions to maintain credibility in quasi-judicial processes.The Standing Counsel, on the other hand, defended the Tribunal's decision, citing Rule 63(4) and (5) of the U.P. Value Added Tax Rules, 2008, which allow for ex parte decisions when a party does not appear despite proper service. The Tribunal justified its decision based on these rules, arguing that no illegality was committed.The Court analyzed the conflicting provisions of the Code of Civil Procedure and the U.P. Value Added Tax Rules. It concluded that while the U.P. Value Added Tax Rules allow for ex parte decisions, the term 'ex parte' should be interpreted in line with the Code of Civil Procedure. The Court highlighted the importance of the principle of 'Audi alteram partem' and emphasized that deciding a case ex parte without giving reasonable opportunity to parties violates this principle.Additionally, the Court addressed the lack of provisions for setting aside ex parte orders. Citing a previous judgment, the Court noted that under the U.P. Value Added Tax Act, provisions for rectification exist in case of ex parte decisions. The Court set aside the Tribunal's decision as illegal and arbitrary, remitting the matter back to the Tribunal for a fresh decision with proper hearing within three months.In conclusion, the Court disposed of the revision, emphasizing the need for cooperation in the proceedings before the Tribunal and ensuring a fair hearing for all parties involved.