THE STATE OF GOA APPELLANT VS. SUMMIT ONLINE TRADE SOLUTIONS (P) LTD & ORS.

THE STATE OF GOA APPELLANT VS. SUMMIT ONLINE TRADE SOLUTIONS (P) LTD & ORS.  

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले



1
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1700/2023
[ARISING OUT OF SLP(C) NO. 29890/2018]
THE STATE OF GOA APPELLANT
VS.
SUMMIT ONLINE TRADE
SOLUTIONS (P) LTD & ORS. RESPONDENTS
 WITH
CIVIL APPEAL NO. 1701/2023
[ARISING OUT OF SLP(C) NO. 29891/2018]
THE STATE OF GOA APPELLANT
VS.
FUTURE GAMING AND SERVICES (P)
LTD & ORS. RESPONDENTS

WITH
CIVIL APPEAL NO.1702/2023
[ARISING OUT OF SLP(C) NO. 29892/2018]
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THE STATE OF GOA APPELLANT
VS.
PAN INDIA NETWORK LTD & ORS. RESPONDENTS
J U D G M E N T
DIPANKAR DATTA, J.
Leave granted.
2. The appellant is one of multiple respondents in W.P.(C) No. 36
of 2017, W.P.(C) No. 38 of 2017 and W.P.(C) No. 59 of 2017,
pending on the file of the High Court of Sikkim (hereafter ‘the High
Court’, for short). Separate applications in the said three writ
petitions were filed by the appellant seeking its deletion from the
array of respondents. The appellant had pleaded in the said
applications that, inter alia, a notification issued by it was under
challenge in the writ petitions and that if, at all, such notification
could be made a subject matter of challenge, the High Court of
Bombay at Goa is the appropriate court where remedy ought to be
pursued. According to the appellant, a notification issued under a
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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. It was further pleaded that since no part of the
cause of action for invocation of the writ jurisdiction had arisen
within the territorial limits of the High Court, the writ petitions ought
not to proceed against the appellant. One other fact brought to the
notice of the High Court by the appellant was that the same
notification was under challenge in W.P.(C) No. 759/2017 instituted
by Serenity Trades Private Limited before the High Court of Bombay
at Goa and that such writ petition after admission was pending for
final hearing. It was urged by the appellant that to avoid conflict of
opinions, the writ petitioners could either independently challenge
the notification before the High Court of Bombay at Goa or apply for
intervention in W.P.(C) No. 759/2017.
3. The High Court, by a common judgment and order dated 6th
June, 2018, has dismissed the three applications. These three
appeals, by special leave, are directed against such judgment and
order.
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4. Since a common judgment and order is under challenge, we
propose to decide these appeals by this common judgment and
order.
5. Various notifications issued under the Central Goods and
Services Tax Act, 2017 (hereafter ‘CGST Act’, for short) and the
Integrated Goods and Services Tax Act, 2017 (hereafter ‘IGST Act’,
for short) are under challenge in all the three writ petitions together
with rate-notifications issued by the States of Goa, Maharashtra,
Punjab and Sikkim. Inter alia, the challenge is to a notification
stated to bear “No.01/2017” dated 30th June, 2017 issued by the
Government of Goa in exercise of power conferred by sub-section
(1) of section 11 of the Goa Goods and Services Tax Act, 2017
(hereafter ‘GGST Act’, for short) levying tax @ 14% on “(L)ottery
authorized by State Governments”. The writ petitioners have
invoked the high prerogative writ jurisdiction of the High Court to
seek a declaration that the impugned notification is unconstitutional
and illegal.
6. The short question that arises for a decision on these appeals
is, whether the High Court was justified in returning the finding that
“at least a part of the cause of action has arisen within the
5
jurisdiction of this Court” and premised on such a finding, to dismiss
the applications.
7. Notice was issued by this Court on 12th November, 2018, after
condonation of delay in presentation of the petitions for special
leave to appeal.
8. None has appeared for the writ petitioners despite service of
notice. We have heard counsel for the appellant and the Additional
Solicitor General appearing for the Union of India as well as counsel
for the other appearing parties.
9. For the purpose of a decision on these appeals, the petition
averments in W.P.(C) No. 38 of 2017 may be noticed. A private
limited company, “engaged in the business of purchase and sale of
lottery tickets run, conducted and organized by the Government of
Sikkim both within the State of Sikkim as well as outside the State”,
is the writ petitioner. The petitioning company sells lottery tickets in
the States of Sikkim, Punjab, Goa and Maharashtra. It is the
pleaded case that the lottery tickets, which are supplied by the
petitioning company, are “lotteries which is being run by the State
Government of Sikkim, it is not a lottery authorized by the State
Government requiring to discharge GST under a higher rate of
taxation of 28%”. The case sought to be set up is that if the
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distinction between “(L)ottery run by State Governments” and
“(L)ottery authorized by State Governments” were made, as has
been done by the impugned notification, the same would be ex facie
illegal and result in wiping out competition.
10. The prayers in W.P.(C) No. 38 of 2017 are to the following
effect:
“(i) Set aside the impugned Notifications 01/2017 Central
Tax(Rate), 01/2017 Integrated Tax (Rate), 01/2017, and
the State rate Notifications of the States of Sikkim, Goa,
Punjab and Maharashtra to the extent it levies differential
rates of tax on the supply of Lottery tickets by creating an
illusory sub-classification between ‘Lottery run by the State
Government’ as discriminatory and violative of Article 14,
19(1)(g), 301, 304 of the Constitution of India and of the
CGST, SGST and IGST Act, and further hold that only 12%
ad valorem tax can be levied uniformly in cases of all State
run lotteries irrespective of where the tickets are sold.
(ii) Direct refund of differential duty paid at the rate of 28%
as against the liability of the Petitioner to pay duty only at
the rate of 12% with interest.
(iii) Set aside the impugned Notifications 01/2017 Central
Tax (Rate), 01/2017 Integrated Tax (Rate) 01/2017 and the
State rate Notifications of the States of Sikkim, Goa, Punjab
and Maharashtra to the extent it levies tax on the face
value of the lottery ticket without abating the prize money,
component of the lottery ticket when the said amount never
forms part of the income of the Petitioner the lottery trade.”
11. 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
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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. The High Court
was also of the view that since notice had been issued on W.P.(C)
Nos. 36 and 38 of 2017 on 17th July, 2017, much before Rule was
issued by the High Court of Bombay at Goa on 28th September,
2017 in W.P.(C) No. 759/2017, no ground had been set up by the
appellant for deletion; hence, the interim applications seeking
deletion stood dismissed.
12. In support of territorial jurisdiction of the High Court to
entertain and try the writ petition, this is what the petitioning
company has stated:
“29. That his Hon’ble Court has jurisdiction to entertain the
said writ petition as the cause of action arises in Sikkim only.
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Both the Petitioner and the Respondents are located within
the territorial jurisdiction of this Hon’ble High Court.”
Apart from these two sentences, nothing more has been averred in
support of territorial jurisdiction of the High Court.
13. From the above, it is clear that according to the petitioning
company the cause of action has arisen in Sikkim only, meaning
thereby the whole of the cause of action and not part of it;
additionally, it is stated that all the respondents are located within
the territorial jurisdiction of the High Court which is factually
incorrect.
14. While dealing with an objection as to lack of territorial
jurisdiction to entertain a writ petition on the ground that the cause
of action has not arisen within its jurisdiction, a high court
essentially has to arrive at a conclusion on the basis of the
averments made in the petition memo treating the contents as true
and correct. That is the fundamental principle. Bearing this in mind,
we have looked into the petition memo of W.P.(C) No. 38 of 2017
and searched in vain to trace how at least part of the cause of
action has been pleaded by the petitioning company to have arisen
within the territorial jurisdiction of the High Court.
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15. 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. However, the classic definition of ‘cause
of action’ given by Lord Brett in Cooke vs. Gill1
 that “cause of
action means every fact which it would be necessary for the plaintiff
to prove, if traversed, in order to support his right to the judgment
of the court”, has been accepted by this Court in a couple of
decisions. It is axiomatic that without a cause, there cannot be any
action. However, in the context of a writ petition, what would
constitute such ‘cause of action’ is the material facts which are
imperative for the writ petitioner to plead and prove to obtain relief
as claimed. Determination of the question as to whether the facts
pleaded constitute a part of the cause of action, sufficient to attract
clause (2) of Article 226 of the Constitution, would necessarily
1 (1873) 8 CP 107
10
involve an exercise by the high court to ascertain that the facts, as
pleaded, constitute a material, essential or integral part of the cause
of action. In so determining, it is the substance of the matter that is
relevant. It, therefore, follows that 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.
16. Here, tax has been levied by the Government of Goa in respect
of a business that the petitioning company is carrying on within the
territory of Goa. Such tax is payable by the petitioning company not
in respect of carrying on of any business in the territory of Sikkim.
Hence, merely because the petitioning company has its office in
Gangtok, Sikkim, the same by itself does not form an integral part
of the cause of action authorizing the petitioning company to move
the High Court. We hold so in view of the decision of this Court in
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National Textile Corporation Ltd. vs. Haribox Swalram2
. The
immediate civil or evil consequence, if at all, arising from the
impugned notification is that the petitioning company has to pay tax
@ 14% to the Government of Goa. The liability arises for the
specific nature of business carried on by the petitioning company
within the territory of Goa. The pleadings do not reflect that any
adverse consequence of the impugned notification has been felt
within the jurisdiction of the High Court. At this stage, we are not
concerned with the differential duty as envisaged in Schedule II [@
6%] vis-à-vis Schedule IV [@ 14%] of the impugned notification.
That is a matter having a bearing on the merits of the litigation. The
long and short of the matter is that the petitioning company has to
bear the liability of paying tax @ 14% levied by the Government of
Goa for selling lottery tickets in the State of Goa under Schedule IV
of the impugned notification. It does not bear out from the petition
memo how the impugned notification levying tax for carrying on
business in the State of Goa subjects the petitioning company to a
legal wrong within the territory of Sikkim for the writ petition to be
entertained by the High Court.
17. In our opinion, the High Court ought not to have dismissed the
applications of the appellant without considering the petition memo
2 (2004) 9 SCC 786
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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.
18. Even otherwise, the High Court was not justified in dismissing
the interim applications. Assuming that a slender part of the cause
of action did arise within the State of Sikkim, the concept of forum
conveniens ought to have been considered by the High Court. As
held by this Court in Kusum Ingots Vs. Union of India3 and
Ambica Industries Vs. CCE4
, even if a small part of the cause of
action arises within the territorial jurisdiction of a high court, the
same by itself could not have been a determinative factor
compelling the High Court to keep the writ petitions alive against
the appellant to decide the matter qua the impugned notification, on
merit.
19. For the reasons aforesaid, we have no hesitation to hold that
the High Court erred in dismissing the applications filed by the
appellant. Consequently, the impugned judgment and order dated
6
th June, 2018 is set aside. The civil appeals are allowed, without
costs.
3 (2006) 4 SCC 254
4 (2007) 6 SCC 769
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20. The appellant shall stand deleted from the array of
respondents in W.P.(C) Nos. 36, 38 and 59 of 2017.
21. Interim order staying the proceedings before the High Court
stands vacated with the result that the High Court may proceed to
decide the writ petitions against the other respondents according to
law.
22. This order shall, however, not preclude the respective writ
petitioners from approaching the appropriate court to assail the
notification dated 30th June, 2017 in accordance with law, if so
advised.
…………………………………J
(S. RAVINDRA BHAT)
…………………………………J
(DIPANKAR DATTA)
NEW DELHI;
14th MARCH, 2023. 

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