The Sikkim High Court’s decision to dismiss the writ applicants’ applications on the grounds that it lacks authority to do so was overturned by the Supreme Court, which was presided over by S. Ravindra Bhatt and Justice Dipankar Datta.
Various notifications issued under the Central Goods and Services Tax Act, 2017 (CGST Act) and the Integrated Goods and Services Tax Act, 2017 (IGST Act) are under challenge in all the three writ petitions together filed by the appellant with rate-notifications issued by the States of Goa, Maharashtra, Punjab and Sikkim.
The bench observed that 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.
The respondents, 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. They sell lottery tickets in the States of Sikkim, Punjab, Goa and Maharashtra.
The petitioner submitted that the lottery tickets are lottery tickets which are 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 bench while dealing the instant case sought to distinguish the Lottery run by State Governments and Lottery authorized by State Governments.
The Sikkim High Court dismissed the application on the ground that the whole cause of action did not happen in the jurisdiction.
The Supreme Court pointed out that the tax was assessed by the Goa government in relation to a venture that the petitioning company is engaged in on Goa’s territory.
The court cited the case National Textile Company Ltd. vs. Haribox Swalram and declared that the petitioner corporation must pay tax to the Goa government at a rate of 14% as the immediate civil or detrimental consequence, if any, of the contested notification. The specific type of business that the petitioning corporation does within the Goa gives rise to the liability.
Further stated that 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.
Further the bench vacated the interim order staying the proceedings of the HC and directed to proceed the writ petitions against the other respondents according to law.
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