2013 (8) TMI 749 - HC - Service Tax

Maintainability of Writ Petition - petition against initiation of inquiry - petition to declare the inquiry initiated was illegal, bad in law and outcome of the arbitrary exercise of the power and without jurisdiction - Territorial jurisdiction - Cause of action - According to the petitioner, since the summons/notices have been issued at the registered office of the petitioner and the replies are made therefrom, it would constitute a part of the cause of action. The petitioner have the several branches across the country for providing services coming under the category of banking and other Financial Services, Business Auxiliary Services and Business Support Services attracting the service tax. The respondent no.3, the Commissioner of Service Tax at Kolkata issued several summons and notices to the petitioner Company for verification of the documents relating to the service tax on the finance lease under the category of Banking and other Financial Services and Business Auxiliary Services Held that - mere issuance of the notice or giving a reply would not constitute a cause of action - Decided against the assessee. Decision in National Textile Corporation Ltd. vs Haribox Swalram 2004 (4) TMI 527 - SUPREME COURT followed. Regarding the contention that the purported action of the respondent no.1 gives rise to an evil consequence at the place of the business of the petitioner at Kolkata, and thus the writ petition is maintainable. Held that - The evil consequence as tried to be contended by the petitioner must relate to the infringement of the rights as guaranteed under Constitution of India. No case of an infringement is made out in the writ petition. Rather it would appear from the pleadings made in the various paragraphs that compliance to the summons and/or notices is made and the entire facts as pleaded in the writ petition would reflect that the sheet anchor of the case founded on the action of the respondent no.1 to reopen the investigation which has already been concluded and dropped by the respondent no.3 - Decision in the case of Kusum Ingots and Alloys Limited 2004 (4) TMI 342 - SUPREME COURT OF INDIA followed. The writ petition was dismissed for want of territorial jurisdiction.

Summary

Issues Involved:
1. Maintainability of the writ petition before the Calcutta High Court.
2. Territorial jurisdiction under Article 226 of the Constitution of India.

Issue-wise Detailed Analysis:

1. Maintainability of the writ petition before the Calcutta High Court:

The respondent authorities raised a preliminary objection regarding the maintainability of the writ petition. They argued that since the investigation was being conducted by the respondent no.1 at Kochi, Kerala, the writ petition before the Calcutta High Court was not permissible. The Court decided to address this preliminary point before delving into the merits of the case.

The petitioner, a non-banking Finance Company with its registered office in Kolkata, received several summons and notices from the Commissioner of Service Tax at Kolkata and the Assistant Director, Directorate General of Central Excise Intelligence at Kochi. The petitioner contended that the inquiry should be conducted by the Kolkata Zonal Unit due to their centralized registration under the Kolkata Service Tax Commissionerate. The petitioner sought a declaration that the inquiry initiated by the respondent no.1 was illegal and without jurisdiction, along with ancillary prayers for quashing the summons and proceedings.

2. Territorial jurisdiction under Article 226 of the Constitution of India:

The petitioner argued that since the summons were served at their registered office in Kolkata and replies were made therefrom, a part of the cause of action arose within the territorial jurisdiction of the Calcutta High Court. They relied on several judgments, including *Kusum Ingots & Alloys Ltd. vs. Union of India* and *Canon Steels P. Ltd. vs. Commissioner of Customs (Export Promotion)*, to support their contention that even a fraction of the cause of action within the Court's jurisdiction would make the writ petition maintainable.

The respondents countered that the proceedings were initiated in Kochi, and mere replies to summons from Kolkata did not constitute a cause of action within the jurisdiction of the Calcutta High Court. They argued that the recording of statements at the registered office did not confer jurisdiction under Article 226(2) of the Constitution.

The Court examined the concept of cause of action, referencing the Supreme Court's judgment in *Kusum Ingots & Alloys Ltd.*, which defined cause of action as material facts necessary for the plaintiff to prove to support their right to judgment. The Court noted that the facts pleaded in the writ petition must have a nexus to the prayer sought and not be unrelated.

The Court also considered the doctrine of forum conveniens, as discussed in the larger bench decision in *Sterling Agro Industries Ltd. vs. Union of India*. The Court concluded that the mere issuance of notices or replies from the registered office did not constitute a cause of action within its jurisdiction. Additionally, the Court found that no infringement of constitutional rights was alleged, and the petitioner's compliance with the summons indicated that the core issue was the reopening of an investigation already concluded by respondent no.3.

Ultimately, the Court dismissed the writ petition for lack of territorial jurisdiction, emphasizing that none of the observations made should be construed as comments on the merits of the disputes raised. The Court also noted that there would be no order as to costs and allowed for urgent certified copies of the judgment to be provided to the parties on a priority basis.