Summary
Lottery distributors based in Sikkim challenged in the Sikkim High Court GST rate notifications of the Centre and several States, including a Goa notification levying 14 per cent tax on lotteries authorised by State Governments; the State of Goa sought deletion from the array of respondents for want of territorial jurisdiction, which the High Court refused holding that part of the cause of action arose in Sikkim. The Supreme Court allowed Goa's appeals: under Article 226(2) the petitioner must plead facts forming an integral part of the cause of action within the court's territory, the tax was levied on business carried on in Goa and the petitioner's Gangtok office alone did not confer jurisdiction, and even a slender part of the cause of action would not compel the court to proceed when forum conveniens pointed elsewhere.
Issues
- Whether the Sikkim High Court had territorial jurisdiction under Article 226(2) of the Constitution to entertain a challenge to a Goa GST rate notification levying tax on lottery business carried on in Goa, merely because the petitioner's office is in Sikkim.
Provisions considered
- Article 226(2), Constitution of IndiaAt least part of the cause of action must arise within the High Court's territory; the facts pleaded must be a material, essential or integral part of the cause of action with a nexus to the subject matter of challenge, judged by the substance of the matter on the averments in the petition. (¶¶ 14, 15, 16, 17)
- Section 11(1), Goa Goods and Services Tax Act, 2017The impugned notification levying 14 per cent tax on lotteries authorised by State Governments was issued under this provision and operates on business carried on within Goa. (¶¶ 5, 16)
Held
- The petition pleaded only that the cause of action arose in Sikkim and that all respondents were located there, the latter being factually incorrect. The tax was payable for selling lottery tickets in Goa, not for any business in Sikkim, so the petitioner's office in Gangtok did not form an integral part of the cause of action, and the petition did not disclose how the notification subjected the petitioner to a legal wrong within Sikkim. (¶¶ 12, 13, 16, 17)
- Even assuming a slender part of the cause of action arose in Sikkim, forum conveniens ought to have been considered; a small part of the cause of action is not by itself determinative compelling the High Court to keep the writ petitions alive against Goa, particularly when the same notification was already under challenge before the Bombay High Court at Goa. (¶¶ 2, 18)
Result
Appeals allowed without costs; Sikkim High Court order dated 06.06.2018 set aside; State of Goa deleted from the array of respondents in W.P.(C) Nos. 36, 38 and 59 of 2017; stay vacated so the High Court may decide the petitions against the other respondents, with liberty to the petitioners to challenge the Goa notification before the appropriate court.