2023 (3) TMI 683 - SC - GST

Territorial jurisdiction of the High Court to entertain and try the writ petition - Levy of GST on purchase and sale of lottery tickets - Seeking deletion from the array of respondents - can a notification issued under a statute could be made a subject matter of challenge? - According to the appellant, a notification issued under a statute enacted by a State legislature cannot be subjected to judicial scrutiny within the jurisdiction of a high court of a different State, more so when no cause of action has arisen within the jurisdiction of that high court. Whether the High Court was justified in returning the finding that at least a part of the cause of action has arisen within the jurisdiction of this Court and premised on such a finding, to dismiss the applications? HELD THAT - The High Court, while delivering the impugned judgment and order, proceeded to hold that the writ petitioners were aggrieved not only by the impugned notification issued by the appellant under the GGST Act but also by the act of the Central Government in issuing the impugned notifications under the CGST Act as well as the IGST Act seeking to levy tax (GST) on lotteries organized, promoted and conducted by the State of Sikkim. The High Court further noted that it was not the actual incidence of GST under the GGST Act which is impugned in the writ petitions but the provisions of law made by the Parliament as well as the respective State Governments including the State of Goa by which they sought to levy GST on lotteries. Considering the prayers made in the writ petition, the High Court was further of the view that, at least, a part of the cause of action had arisen with its jurisdiction. This is a case where clause (2) of Article 226 has been invoked by the High Court to clothe it with the jurisdiction to entertain and try the writ petitions. The Constitutional mandate of clause (2) is that the cause of action , referred to therein, must at least arise in part within the territories in relation to which the high court exercises jurisdiction when writ powers conferred by clause (1) are proposed to be exercised, notwithstanding that the seat of the Government or authority or the residence of the person is not within those territories. The expression cause of action has not been defined in the Constitution - the party invoking the writ jurisdiction has to disclose that the integral facts pleaded in support of the cause of action do constitute a cause empowering the high court to decide the dispute and that, at least, a part of the cause of action to move the high court arose within its jurisdiction. Such pleaded facts must have a nexus with the subject matter of challenge based on which the prayer can be granted. Those facts which are not relevant or germane for grant of the prayer would not give rise to a cause of action conferring jurisdiction on the court. These are the guiding tests. The High Court ought not to have dismissed the applications of the appellant without considering the petition memo which has no semblance of a case having been made out as to how part of cause of action arose within the territorial limits of the High Court or without any pleading as to how any right has been affected within the territory of Sikkim. There are no hesitation to hold that the High Court erred in dismissing the applications filed by the appellant. Consequently, the impugned judgment and order dated 6th June, 2018 is set aside - appeal allowed.

Summary

Issues Involved:
1. Territorial Jurisdiction of the High Court.
2. Cause of Action.
3. Forum Conveniens.

Summary:

Territorial Jurisdiction of the High Court:
The appellant, one of the respondents in three writ petitions pending before the High Court of Sikkim, sought deletion from the array of respondents, arguing that the High Court of Bombay at Goa was the appropriate forum for challenging a notification issued by it. The appellant contended that a notification issued under a state statute cannot be subjected to judicial scrutiny by a high court of a different state, especially when no cause of action has arisen within the jurisdiction of that high court. The High Court of Sikkim, however, dismissed the applications, leading to these appeals.

Cause of Action:
The primary issue was whether the High Court of Sikkim was justified in holding that "at least a part of the cause of action has arisen within the jurisdiction of this Court." The writ petitions challenged various notifications under the CGST Act, IGST Act, and rate notifications by the States of Goa, Maharashtra, Punjab, and Sikkim. The petitioners sought a declaration that the impugned notification was unconstitutional and illegal. The High Court held that since the petitioners were aggrieved by notifications issued by both the central and state governments, part of the cause of action arose within its jurisdiction.

Forum Conveniens:
The Supreme Court examined the petition memo and found no substantial averments supporting the claim that part of the cause of action arose within the territorial jurisdiction of the High Court of Sikkim. The Court emphasized that the cause of action must be material facts imperative for the writ petitioner to plead and prove to obtain relief. The Court held that the High Court should have considered the concept of forum conveniens, as even if a small part of the cause of action arose within Sikkim, it should not have been the determinative factor compelling the High Court to keep the writ petitions alive against the appellant.

Conclusion:
The Supreme Court concluded that the High Court erred in dismissing the applications filed by the appellant. The impugned judgment and order dated 6th June 2018 were set aside, and the civil appeals were allowed. The appellant was deleted from the array of respondents in the writ petitions, and the High Court was directed to proceed with the writ petitions against the other respondents according to law. The order did not preclude the writ petitioners from approaching the appropriate court to challenge the notification dated 30th June 2017 in accordance with the law.