1. In this petition under Article 226 of the Constitution the vires of regulation 8(2) of the Appellate Tribunal Regulations, 1957, is challenged. The question for our decision is, whether the said regulation, viz. Regulation 8(2), is ultra vires of section 22(4) of the Mysore Sales Tax Act, 1957, to be hereinafter referred to as the 'Act'.
2. The material facts of this case are as follows : The petitioner, aggrieved by the order of the Assistant Commissioner of Commercial Taxes, Belgaum Division, Belgaum, in No. GDG/MST 145/61-62, dated 5th February, 1963, went up in appeal before the Mysore Sales Tax Appellate Tribunal, Bangalore, in Sales Tax Appeal No. 42 of 1963-64. That appeal was posted for hearing on the 4th day of September, 1963. That day, the appellant as well as his counsel were absent. The Tribunal dismissed the appeal for default of petitioner's appearance. The petitioner's application for restoration of the appeal was also dismissed by its order dated 10th March, 1964. Hence this writ petition.
3. In this writ petition, it is prayed that this Court may be pleased to quash the orders passed by the Mysore Sales Tax Appellate Tribunal 'in Nos. 351/63-64, 304/63-64 and S.T.C. No. 42/63-64 dated 10th March, 1964, 24th December, 1963 and 4th September, 1963 respectively'. But in the course of the arguments, we were merely asked to quash the order of the Tribunal dated 4th September, 1963, dismissing the appeal for default of petitioner's appearance on the ground that regulation 8(2) is ultra vires of section 22(4) of the 'Act'.
4. In the 'Act' there is no provision empowering the Tribunal to dismiss any appeal for default. On the other hand, section 22(4) provides :
'The Appellate Tribunal shall, after giving both parties to the appeal a reasonable opportunity of being heard, pass such orders thereon as it thinks fit ......'
5. Section 4(4) of the 'Act' empowers the Tribunal to make regulations. That section reads :
'The Appellate Tribunal shall, with the previous sanction of the State Government, make regulations consistent with the provisions of this Act and the rules made thereunder, for regulating its procedure and the disposal of its business.'
6. In pursuance of the power conferred under that provision, the Tribunal has framed several regulations in the year 1957. The regulation with which we are concerned here is, as mentioned earlier, regulation 8(2), which reads :
'After the appeal has been registered, notice of the date fixed for hearing under clause (1) in Form C shall be delivered or issued by registered post to the party. The notice shall state that if he does not appear on the day fixed or on any other day to which the hearing may be adjourned, the appeal will be dismissed for default, or disposed of on merits ex parte.'
7. At this stage, we may also refer to regulation 9(1), which makes provision for setting aside ex parte orders and orders dismissing appeals for default of appearance of appellants. That regulation reads :
'When an appeal has been dismissed for default or disposed of ex parte, the appellant may apply to the Appellate Tribunal for re-admission of the appeal; and where it is shown to the satisfaction of the Appellate Tribunal that he was prevented by sufficient cause from appearing when the appeal was called for hearing, the Appellate Tribunal shall re-admit the appeal.'
8. If regulation 8(2) is ultra vires of section 22(4), in so far as it authorises dismissal of appeals for default, naturally we must hold that regulation 9(1) is also bad to the extent it provides for restoration of appeals dismissed for default. Further it becomes unnecessary.
9. The vires of regulations 8(2) and 9(1) depends upon the true scope of sub-section (4) of section 22 of the 'Act'. Therefore, the primary question for our decision is what exactly is the meaning of the expression 'pass such orders thereon as it thinks fit'. The expression 'thereon' clearly refers to the appeal filed under section 22 of the 'Act'. Under section 22(1) any assessee objecting to an order relating to assessment passed by the Assistant Commissioner on appeal under section 20 or by the Deputy Commissioner whether on appeal under section 20 or suo motu under sub-section (1) of section 21, may if he has not preferred an application for revision of the order under sub-section (2) of section 21, appeal to the Appellate Tribunal within sixty days from the date on which the order was communicated to the assessee. The appeal should be filed in the prescribed form and verified in the prescribed manner. Under section 22(4) the Appellate Tribunal has to pass an order thereon, viz., on the appeal. Examining the scope of the expression 'thereon' found in section 33(4) of the Indian Income-tax Act, 1922, which is in pari materia with section 22(4) of this Act, Chagla, C.J., speaking for the Court in New India Life Assurance Co., Ltd. v. Commissioner of Income-tax, Excess Profits Tax, Bombay City ( 31 I.T.R. 844 at p. 856), observed as follows :-
'Now, in the first place, we must look at the section which confers jurisdiction upon the Tribunal to hear appeals from the decisions of the Appellate Assistant Commissioner. Sub-section (4) of section 33 provides that the Appellate Tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, and shall communicate any such orders to the assessee and to the Commissioner. The expression 'thereon' has come in for considerable judicial comment and observation, and the authorities lay down that the power of the Tribunal is confined to dealing with the subject-matter of the appeal and the subject-matter of the appeal is constituted by the grounds of appeal preferred by the appellant. This subject-matter cannot be expanded even by the appellant unless leave is granted to him to do so by the Appellate Tribunal. The subject-matter can certainly not be expanded by the respondent, as already pointed out, if he has not either appealed or cross-objected.'
10. An order of dismissal for default cannot be said to be an order passed on the subject-matter of the appeal. It is certainly an order de hors the subject-matter of the appeal. The order in question does not deal with the grounds of appeal. On the other hand, the Tribunal has refused to look into the grounds of appeal. It rejects the appeal itself on the ground that the appellant as well as his Advocate were absent. Therefore, an order dismissing an appeal for default cannot be said to be an order passed on the subject-matter of the appeal.
11. If the 'Act' prescribes, as we think it does, that the Appellate Tribunal should dispose of the appeal after considering the subject-matter of the appeal, that mandate of the Legislature quite clearly precludes the Appellate Tribunal from dismissing the appeal for default. The impugned regulation runs counter to that mandate and therefore it is ultra vires of section 22(4) of the 'Act'. It is unnecessary to consider in this case whether an appellate Court or Tribunal has inherent right to dismiss a proceeding before it for default, as in this case according to our judgment, section 22(4) of the 'Act' requires the Appellate Tribunal to decide the appeal before it on merits, whether the appellant or his Advocate is present at the hearing or not.
12. Our view in this regard finds support from a Full Bench decision of the Madras High Court in S. Chenniappa Mudaliar, Madurai v. Commissioner of Income-tax, Madras ( 53 I.T.R. 323; (1964) 2 M.L.J. 157). Therein, their Lordships were considering the vires of rule 24 of the Income-tax Appellate Tribunal Rules, 1946, which provides for dismissal of appeal by the Income-tax Appellate Tribunal for default. Their Lordships came to the conclusion that the rule in question is ultra vires of section 33(4) of the Indian Income-tax Act, 1922. The aforementioned rule 24 is similar to the impugned regulation 8(2). Our conclusion also gains support from the decision of the Patna High Court in Md. Amin Brothers v. State of Bihar : AIR1951Pat152 .
13. An examination of the scheme of the 'Act' also leads to the same conclusion. Under section 23 of the 'Act', an assessee aggrieved by the order of an Appellate Tribunal can go up in revision to the High Court when the Appellate Tribunal has either failed to decide or decided erroneously any question of law. That is a statutory right given to an assessee. That right will be lost to the assessees whose appeals are dismissed for default, if we hold that the Appellate Tribunal is competent to dismiss appeals for default of appearance of appellants. A construction which leads to such a conclusion should be avoided.
14. For the reasons mentioned above, we hold that regulation 8(2), to the extent it purports to empower the Appellate Tribunal to dismiss an appeal before it for default of appearance of the appellant or his Advocate, is ultra vires of section 22(4) of the 'Act'.
15. In the result, this writ petition is allowed and the order of the Appellate Tribunal dated 4th day of September, 1963, in S.T.A. No. 42/1963-64, dismissing the appeal for default of appearance of the appellant before it (petitioner herein) is quashed and that Tribunal is directed to take the appeal on its file, and dispose of the same in accordance with law. No costs.
16. Petition allowed.