2024 (10) TMI 1165 - HC - GST

Appellate order set aside for deciding ex-parte without hearing parties under UP VAT Act 2008

The Allahabad HC set aside an ex-parte appellate order passed by the Commercial Tax Tribunal under the U.P. Value Added Tax Act, 2008. The court held that ... Decision of appeal ex-parte - Impugned order passed ex-parte by the appellate authority on the ground that on the date fixed, the counsel of the appellant could not appear before the appellate authority and neither did anyone appear on behalf of the State and the appeal was decided on merits - whether in absence of counsel of the appellant, the appellate authority can proceed to consider and decide the appeal 'ex-parte' in absence of the appellant? - HELD THAT:- The specific statutory mandate is that after hearing the appellant, the Appellate Authority is to make further enquiry, if found necessary and pass such orders as it thinks just and proper, confirming, modifying or annuling the decision or order appealed against. Such affirmation, modification or annulment shall not be an empty formality nor can it be mechanical, without the consideration of the grounds of appeal. It is observed so, specifically when the Appellate Authority is empowered to refuse the prayer for adjournment made by an appellate, if on three prior occasions, such adjournment has been allowed, in which case also the Appellate Authority cannot absolve itself from the obligation to conduct such further enquiry as is mandated under sub-section (11) of Section 107. Sub-section (12), it has to be further emphasized, also requires the order of the Appellate Authority disposing of the appeal to be in writing and specifically stating the points for determination, the decision thereon and the reasons for such decision. When an appeal is dismissed for reason only for absence of the appellant or lack of effective prosecution, then the Tribunal should be found to have abdicated its powers and not followed the statutory mandate. Even otherwise, deciding a case ex-parte on merits without giving reasonable opportunity to the parties is blatant violation of rule of 'Audi alterum partem'. In absence of the appellant, the Commercial Tax Tribunal had the authority to dismiss the appeal in default as provided in the Order XLI Rule 17 of the Code of Civil Procedure, 1908 rather than hearing it ex-parte and deciding it on merits. 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 18.12.2023, whereby the appellate authority has proceeded to decide the appeal preferred by the petitioner in his absence, is held to be illegal and arbitrary and accordingly set aside and the matter is remitted back to the appellate authority to decide the matter afresh after affording an opportunity of hearing to the parties and considering the fact that much time due to pendency of the aforesaid proceedings, has elapsed, the appellate authority is directed to expedite the appeal and decide the same within three months from the date of production of a certified copy of this order, in accordance with law. Revision allowed. Issues:Challenge to order of appellate authority for proceeding ex-parte, Interpretation of Code of Civil Procedure rules, Applicability of Order XLI Rule 17, Compliance with principles of natural justice, Setting aside ex-parte order, Provision for rectification in absence of defendant.Analysis:1. The petitioner challenged an order of the appellate authority that proceeded ex-parte due to the absence of the petitioner's counsel. The petitioner argued that the appellate authority should have dismissed the appeal in default rather than deciding on merits, citing provisions of the Code of Civil Procedure related to appearance of parties in suits and appeals.2. The petitioner relied on Order IX Rule 6 and Rule 8, as well as Order XLI Rule 17 of the Code of Civil Procedure, emphasizing that when an appellant does not appear, the court should dismiss the appeal for want of prosecution. The petitioner also referred to a Supreme Court judgment highlighting the importance of dismissing appeals for non-prosecution rather than deciding on merits in the absence of the appellant.3. The Court analyzed the statutory provisions of Section 107 of the UP GST Act, emphasizing the requirement for the Appellate Authority to provide a fair hearing to the appellant. The Court noted that the Appellate Authority must conduct a further inquiry and pass orders justly, following the statutory mandate without dismissing appeals merely due to absence of the appellant.4. The Court reiterated the principle of 'Audi alteram partem,' emphasizing that deciding a case ex-parte without providing a reasonable opportunity to the parties violates this rule. It was highlighted that the Commercial Tax Tribunal should have dismissed the appeal in default rather than proceeding ex-parte and deciding on merits.5. Referring to a Supreme Court case, the Court emphasized the importance of administrative authorities and tribunals providing fair hearings and clear reasons for their decisions. Additionally, the Court noted that there should be provisions for setting aside ex-parte orders, as highlighted in a judgment interpreting the U.P. Value Added Tax Act.6. Consequently, the Court held the appellate authority's decision to proceed ex-parte as illegal and arbitrary, setting it aside. The matter was remitted back to the appellate authority for a fresh decision, with directions to expedite the appeal and decide within three months, ensuring compliance with principles of natural justice and procedural fairness.