[Opinion] CESTAT Dismissal for Non-Prosecution – Bombay HC on Section 129B and Supreme Court Precedents

R. Raghunathan – [2025] 178 taxmann.com 99 (Article)

1. The Bombay High Court Decision (Nagpur Bench, 22 August 2025)

1.1 Facts

(a) Titan Company Ltd. filed an appeal for adjudication before CESTAT.
(b) At the CESTAT hearing the appeal was dismissed purportedly under the CESTAT Procedure Rules (for non-appearance / want of prosecution).
(c) The taxpaye challenged that dismissal before the Bombay High Court (Nagpur Bench) contending that the Tribunal ought to have disposed the appeal on merits (or restored it) rather than dismissing it for default.
(d) The Nagpur Bench allowed the writ/challenge, set aside the dismissal and directed the matter to be decided on merits / restored.

1.2 Reasoning

Section 129B of the Customs Act, 1962 mandates CESTAT to “pass such orders thereon as it thinks fit.”
This provision does not empower the Tribunal to dismiss an appeal for default; it must decide the matter on merits, even if one party remains absent.
The ratio is that the dismissal of an appeal for non-prosecution is beyond jurisdiction. The appellate body must adjudicate the case on merits, preferably ex parte, rather than throwing it out for want of appearance.
This decision aligns with long-standing Supreme Court precedents and reinforces the principle that substantive justice cannot be defeated by procedural lapses.

2. Parallel Jurisprudence in the Supreme Court

Below are the principal authorities which form the settled jurisprudence on the question whether an appellate tribunal (CESTAT/ITAT) may dismiss appeals for non-appearance — arranged from the most authoritative (Supreme Court) to leading High Court decisions.

2.1. Balaji Steel Re-Rolling Mills v. CCE & Customs [2014] 52 taxmann.com 107/29 GSTR 502/36 STR 1201/49 GST 1 (SC)

Core point: the CESTAT (Tribunal under Central Excise Act) cannot dismiss an appeal for want of prosecution under its procedure rules if the parent Act (s.35C, Central Excise Act then) contemplates the Tribunal passing an order “thereon” — the Tribunal’s proper course is to decide the appeal on merits or take suitable steps short of extinguishing the appeal. The Supreme Court struck down reading of Rule 20 as empowering dismissal in a way inconsistent with s.35C.

Why it matters: Balaji Steel is the controlling Supreme Court precedent for CESTAT appeals; it established the proposition that procedural rules cannot be used to deny the parties a merits adjudication where the statute requires an order on appeal

2.2. CIT v. S. Chenniappa Mudaliar [1969] 74 ITR 41 (SC)

Core point: Under the Income-tax Act (s.254) and the then rule permitting dismissal for non-appearance, the Supreme Court held the Tribunal should not dismiss appeals for non-appearance where the statutory provision requires the Tribunal to “pass such orders thereon” — dismissal for default is not an order on appeal; parties are entitled to have their appeals decided on merits or the appeal should be restored where sufficient cause is shown.

Why it matters: The decision in Chenniappa Mudaliar (supra) is the classical authority for ITAT-related procedure: it is the Supreme Court bedrock that procedural rules permitting dismissal for non-appearance cannot be used to circumvent the statutory duty to adjudicate appeals on merits. This case is repeatedly relied on when High Courts and Tribunals consider restoration and in-limine dismissals.

These judgments set the binding law that no appellate tribunal, unless specifically empowered by statute, can dismiss an appeal for want of prosecution.

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