What can you do if you've submitted an important tax appeal but can't attend the hearing due to reasonable circumstances, either yourself or through your representative? Can a simple technical issue, like not attending the hearing, mean that the appeal will be completely dismissed and that your statutory right to bring an appeal has been erased?
As a win for substantive justice, the Bombay High Court (Nagpur Bench) has fashioned a straightforward and absolute answer in Titan Company Ltd.: No. The Court has ruled that an appeal cannot be dismissed simply because an appellant did not attend the hearing.
The main question before the High Court was whether a tribunal - namely, CESTAT (Customs, Excise and Service Tax Appellate Tribunal) - is authorized to dismiss an appeal for failure to appear.
The Court held that it is not the duty of a tribunal to simply dispose of cases based on procedural errors. Rather, it is duty-bound to:
● Decide every appeal on its merits.
● Proceed with the hearing and deliver a decision based on the records, arguments, and evidence in existence.
● If the appellant is absent, make an order ex parte on the merits, not an order of dismissal for non-prosecution.
The High Court's ruling reiterated an essential tenet of law: the right of appeal is a substantive right. It is an essential element of the judicial process, and procedural default cannot defeat this right. By dismissing the appeal (without consideration of the merits), the right of appeal was effectively extinguished.
The ruling is not an original creation rather a strong affirmation of what has already been clarified in well-established case law by the Supreme Court of India. The Bombay High Court relied on cases such as:
● S. Chenniappa Mudaliar v. CIT - A case in which the Supreme Court laid down that appellate authorities have a fundamental obligation to dispose of an appeal on the merits.
● CIT v. Balaji Steel Re-Rolling Mills - A case that further solidified the principle that dismissal for default cannot be a proper disposal of an appeal.
By referring to such reputable authorities, the Bombay High Court highlighted that the principle is settled law, and that it should be applied uniformly and consistently by all subordinate judicial and quasi-judicial functions.
Arguably, the most important aspect of the Titan Company case is its broad ripple effect. While the case arose from the CESTAT, the principle is applicable everywhere to all of the important appellate tribunals.
● Income Tax Appellate Tribunal (ITAT): The case is applicable directly to the ITAT. Taxpayers and advisors can expect that the issues raised in the appeal, and the materials relied on, will be considered even if the taxpayer does not appear at the hearing.
● GST Appellate Tribunal (GSTAT): This decision is incredibly timely as the anticipated GSTAT is on the verge of being inaugurated. It sets forth a definitive precedent, and a degree of high standard judicial behaviour for the new tribunal commencing operations that accords with the principles of natural justice and fairness.
This judgment is foundational for uniform jurisprudence to develop so that regardless of the tribunal, the appellant's substantive right to have a case heard on the merits is established as a guiding principle.
While the Titan Company ruling is a worthwhile protection for appellants, it shouldn't be an invitation to be lazy. It's in the appellant's best interest to attend to and argue the matter. The ex-parte hearing means losing the important opportunity to provide oral arguments, answer questions from the tribunal, and respond to the other side in real time.
Nevertheless, the Titan Company decision provides a necessary safety net. It ensures that an unexpected event or wrong mistake doesn't impede an otherwise righteous appeal from subscribers. It enforces the well-known legal principle that substance should always prevail over procedure, thereby strengthening the foundation of our appellate justice system.