TaxTMI 
TaxTMI 
TaxTMI 
The recent decision of the Delhi High Court in the context of goods seized by Customs at Kolkata has once again brought into sharp focus a recurring confusion in indirect tax litigation-whether the mere issuance of a circular by the Central Board of Indirect Taxes and Customs (CBIC) at Delhi confers jurisdiction upon the Delhi High Court. The Court answered this in the negative, reaffirming a settled but often ignored distinction between the applicability of circulars and the territorial jurisdiction of constitutional courts.
At the outset, it must be clearly understood that CBIC circulars are not geographically confined. They are issued under statutory authority, such as Section 151A of the Customs Act, 1962 and Section 37B of the Central Excise Act, 1944, with the object of ensuring uniformity in the classification of goods or implementation of law. These circulars are binding on departmental officers across India. The law on this point is well settled through a consistent line of decisions of the Hon'ble Supreme Court, including RANADEY MICRONUTRIENTS Versus COLLECTOR OF CENTRAL EXCISE - 1996 (9) TMI 124 - Supreme Court and PAPER PRODUCTS LTD. Versus COMMISSIONER OF CENTRAL EXCISE - 1999 (8) TMI 70 - Supreme Court, which hold that circulars are binding on the department even if they deviate from strict statutory interpretation, so long as they are beneficial to the assessee.
However, the binding nature of circulars cannot be conflated with the question of territorial jurisdiction. The constitutional scheme under Article 226 makes it clear that a High Court exercises jurisdiction only when the cause of action, wholly or in part, arises within its territorial limits. This principle has been authoritatively laid down by the Hon'ble Supreme Court in UNION OF INDIA Versus ADANI EXPORTS LTD. - 2001 (10) TMI 321 - Supreme Court, where it was held that the situs of the authority passing an order is not determinative; what matters is the place where the facts constituting the cause of action arise.
It is in this backdrop that the Delhi High Court's recent ruling assumes significance. The Court rejected the contention that since CBIC is located in Delhi and the impugned circular emanates from Delhi, the Delhi High Court would have jurisdiction. The Court rightly held that the cause of action arose in Kolkata, where the goods were seized and proceedings initiated. The issuance of a circular at Delhi was held to be merely incidental and not a constitutive fact giving rise to jurisdiction.
This distinction is fundamental. A circular is a general administrative instruction. It does not, by itself, create a lis or dispute. The dispute arises only when the circular is applied or misapplied by field formations-through seizure, assessment, adjudication, or recovery proceedings. It is these actions that give rise to a cause of action, and consequently determine the appropriate forum.
The tendency of litigants to invoke the jurisdiction of the Delhi High Court on the ground that CBIC is headquartered there is, therefore, misplaced. Such an approach amounts to forum shopping and has been consistently discouraged by courts. The mere existence of a circular, or even its issuance from Delhi, does not furnish a cause of action unless it is shown that the impugned action has a nexus with the territorial jurisdiction of the Court approached.
Equally, it must be emphasised that the pan-India applicability of circulars remains unaffected by this ruling. A circular issued by CBIC is binding on officers in Kochi, Kolkata, Ahmedabad, or any other part of the country. The uniformity sought to be achieved by such circulars is not diluted. What is clarified is only the forum before which a challenge or grievance must be raised.
In practical terms, this has significant implications for litigation strategy. An assessee aggrieved by a seizure, show cause notice, or adjudication order must approach the High Court within whose jurisdiction such action has taken place. Even when the challenge is directed against the validity or interpretation of a circular, the petition must be anchored to a real cause of action arising within the territorial limits of the Court. A mere abstract challenge to a circular, divorced from its application, is unlikely to sustain jurisdiction.
The ruling thus reinforces a disciplined approach to writ jurisdiction. It draws a clear line between normative authority (circulars) and adjudicatory geography (jurisdiction). While the former operates uniformly across the country, the latter remains territorially confined.
In conclusion, the legal position may be succinctly stated:
CBIC circulars travel across India; jurisdiction does not.
The place of issuance of a circular is irrelevant for determining jurisdiction. What matters is where the law, as interpreted or implemented through that circular, is put into action. That is where the cause of action lies, and that is where the writ must follow.
-----
By Adv. G. Jayaprakash (Former Central Excise Officer)