2025 (7) TMI 408 - HC - VAT / Sales Tax

Tribunal lacks power to dismiss VAT appeals for non-prosecution, must decide on merits under Section 26(5)(a)

Priyanka Motors Versus State of Maharashtra & Ors.

The Bombay HC allowed the petition challenging the Tribunal's dismissal of petitioner's VAT Second Appeal for non-prosecution due to advocate's absence. ... Dismissal of Petitioner’s Appeal on the ground of the absence of the Consultant and the order declining the restoration of the Petitioner’s VAT Second Appeal - power of Tribunal to dismiss an Appeal for default or non-prosecution - HELD THAT:- The Tribunal could not have dismissed the Petitioner’s Second Appeal on the ground of absence of the Petitioner’s Advocate/ Consultant or for non-prosecution. The Tribunal was obliged to decide the Second Appeal in the manner indicated in Section 26(5)(a), i.e., on merits. This having not been done, the impugned orders are liable to be set aside, and we do hereby set aside the same. In National Building Construction [2024 (11) TMI 198 - BOMBAY HIGH COURT], in similar circumstances, the Petition was allowed, subject to the petitioner paying the costs. In this matter as well, this Petition is allowed subject to the Petitioner paying costs of Rs. 25,000/- to the Bar Council of Maharashtra and Goa within four weeks from the date of uploading of this order and filing a proof of payment to be filed in the Registry. If costs are not paid within the time indicated, this Petition shall be deemed dismissed without further reference to this Court. Petition allowed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Court were:- Whether the Maharashtra Sales Tax Tribunal ('Tribunal') had the jurisdiction or power under Section 26(5)(a) of the Maharashtra Value Added Tax Act, 2002 ('MVAT Act') to dismiss a Second Appeal on the ground of non-prosecution or absence of the appellant's consultant/advocate.- Whether the Tribunal was bound to decide the Second Appeal on its merits as mandated by the statutory provisions, notwithstanding procedural defaults such as absence or non-prosecution.- The interplay and primacy between the substantive provisions of the MVAT Act and the procedural rules framed thereunder, particularly concerning dismissal of appeals for default.- The applicability and relevance of precedents, including the coordinate Bench decision in National Building Construction and the Supreme Court ruling in Balaji Steel Re-rolling Mills, to the facts of the present case.- The appropriate remedy and conditions for restoration of the dismissed appeal.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Jurisdiction of the Tribunal to dismiss appeals for non-prosecution or absenceRelevant legal framework and precedents:The Court examined Section 26(5)(a) of the MVAT Act, which empowers the appellate authority to confirm, reduce, enhance, annul, or set aside assessments and remit the matter for fresh assessment. The provision does not expressly confer power to dismiss appeals for default or non-prosecution.The Court also relied heavily on the coordinate Bench decision in National Building Construction, which interpreted Section 26(5)(a) in light of the procedural rules and held that the substantive statutory provision prevails over any conflicting procedural rules that permit dismissal for absence.Further, the Supreme Court decision in Balaji Steel Re-rolling Mills was cited, where similar provisions under the Central Excise Act were considered. The apex court held that substantive provisions of the statute override procedural rules allowing dismissal for non-appearance, thereby requiring appeals to be decided on merits.Court's interpretation and reasoning:The Court emphasized the primacy of the statute over subordinate rules, stating that the Tribunal must comply with the mandate of Section 26(5)(a) to decide appeals on merits. The procedural rules permitting dismissal for non-prosecution cannot override this statutory command.The Court noted that the Tribunal erred in dismissing the Second Appeal solely on the ground of the absence of the Petitioner's consultant or non-prosecution, without adjudicating the appeal on merits.Application of law to facts:Given the Tribunal's dismissal order dated 29th August 2024 and the refusal to restore the appeal on 24th October 2024, the Court found these orders contrary to the statutory mandate. The Tribunal's action was held to be without jurisdiction and hence invalid.Treatment of competing arguments:The Respondent-State's arguments supporting dismissal based on procedural default were implicitly rejected by the Court, which relied on binding precedents that prioritize substantive adjudication over procedural technicalities.Conclusions:The Tribunal lacked power to dismiss the appeal for non-prosecution and was obliged to decide the appeal on merits under Section 26(5)(a). The impugned orders were set aside accordingly.Issue 2: Remedy and conditions for restoration of the dismissed appealRelevant legal framework and precedents:The Court referred to the remedy adopted in National Building Construction, where restoration of the appeal was allowed subject to payment of costs to ensure compliance and deter frivolous or negligent conduct.Court's interpretation and reasoning:The Court adopted a similar approach, allowing restoration of the appeal on condition that the Petitioner pays costs of Rs. 25,000/- to the Bar Council of Maharashtra and Goa within a stipulated period.Application of law to facts:This condition was imposed to balance the interests of justice and procedural discipline, ensuring that the Petitioner's default did not go unaddressed but also that the substantive rights were preserved.Treatment of competing arguments:No specific competing submissions on costs were recorded, but the Court's discretionary power to impose costs as a condition for restoration was exercised in line with precedent.Conclusions:Restoration of the appeal was granted subject to payment of costs within four weeks, failing which the petition would be deemed dismissed. The restored appeal was directed to be decided on merits by the Tribunal.3. SIGNIFICANT HOLDINGS- 'It is a settled position of law, that between a Statute and a Rule, it is the Statute, which has primacy and therefore, prevails upon the Rule.'- 'While deciding the appeal, the Authority will have to be governed by the mandate of Section 26(1)(a) [sic, Section 26(5)(a)] of the Maharashtra Value Added Tax Act and decide the appeal in the manner as indicated therein, the Rule being subservient to it.'- 'The Tribunal could not have dismissed the Petitioner's Second Appeal on the ground of absence of the Petitioner's Advocate/ Consultant or for non-prosecution. The Tribunal was obliged to decide the Second Appeal in the manner indicated in Section 26(5)(a), i.e., on merits.'- The Court's final determination was to set aside the impugned dismissal and refusal to restore the appeal, restore the appeal on payment of costs, and remit the matter to the Tribunal for adjudication on merits.