Dealer Fails to Appear Due to Illness: Madras HC Quashes Sales Tax Ex Parte Order, Remands Matter on Sales of Children’s Educational Books [Read Order]

Standard Press (India) Pvt. Ltd., engaged in the printing business, was assessed under the Tamil Nadu General Sales Tax (TNGST) Act, 1959 for the assessment year 2004-2005. The Assessing Officer reopened the assessment under Section 16, disallowing exemption claims on the sale of children’s educational books worth Rs. 31,33,821 and printed car manuals worth Rs. 47,26,257 supplied to Hyundai Motors.

Tax was levied under Section 3-G of the Act, and 1% tax under Section 3(4) was also imposed on certain export sales.

The assessee appealed to the Appellate Authority, which modified the assessment order. It held that goods listed in the Third Schedule were exempt under Section 8, and such exemption could not be denied merely because the dealer opted for compounded tax under Section 3-G.

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When the Revenue appealed before the Tribunal, the assessee’s representative could not appear on the hearing date due to illness, leading to an ex parte dismissal of the appeal.

Challenging this, the assessee approached the High Court, arguing that the Tribunal’s order violated principles of natural justice since the dealer was not afforded a fair opportunity to present the case.

The petitioner’s counsel argued that the tribunal should have provided another opportunity before deciding the matter, as the absence was caused by genuine illness.

The revenue’s counsel argued that once a dealer opts for compounded tax under Section 3-G, all sales, including those of exempted goods, fall within its ambit. They further argued that the Tribunal’s decision was consistent with law and did not warrant interference.

The Division Bench comprising Justice P. Velmurugan and Justice K.K. Ramakrishnan observed that the Tribunal had disposed of the appeal ex parte without granting an opportunity to the dealer to be heard.

The court explained that such an approach violated the principles of natural justice, especially when the absence was due to illness and beyond the control of the assessee. The court pointed out that the issue required reconsideration on merits after giving both sides a fair chance to present their arguments.

The court held that the ex parte order passed by the Tribunal could not be sustained. It set aside the impugned order and remitted the matter back to the Tribunal for fresh consideration after providing an opportunity to both parties.

The tribunal was directed to dispose of the case within three months from the date of hearing. The substantial questions of law were left open and the tax case revision was allowed.

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