2013 (8) TMI 749 - HC - Service Tax

High Court Dismisses Writ Petition for Lack of Jurisdiction

The Calcutta High Court dismissed the writ petition for lack of territorial jurisdiction, emphasizing that the cause of action did not fall within its ... Cause of action - territorial jurisdiction under Article 226(2) of the Constitution - forum conveniens - evil consequence doctrine - service tax investigation and summons - centralised registration and situs of inquiryCause of action - territorial jurisdiction under Article 226(2) of the Constitution - service tax investigation and summons - centralised registration and situs of inquiry - evil consequence doctrine - forum conveniens - Maintainability of the writ petition in the Calcutta High Court on territorial jurisdiction grounds. - HELD THAT: - The Court examined whether any part of the cause of action arose within its territorial jurisdiction so as to render the writ petition maintainable. Reliance was placed on the principle that a cause of action comprises the material facts which a plaintiff must allege and prove to obtain relief. The Court held that mere issuance of summons or notices from another forum, or the giving of replies from the petitioner's registered office, does not by itself constitute an integral part of the cause of action. Recording of statements at the registered office similarly did not confer jurisdiction. The Court applied the ratio of Kusum Ingots and Alloys Ltd. and related authorities, and noted the guidance in Sterling Agro regarding that even a minuscule part of a cause of action within the territorial jurisdiction may suffice, but emphasized that the existence of such part must be more than mere correspondence or reply. The petitioner's alternative contention based on the 'evil consequence' doctrine was considered: an evil consequence giving rise to jurisdiction must involve invasion or infringement of rights (for example constitutional rights) at the forum of business. The Court found no pleading of any such infringement; compliance with summons and the fact that an earlier inquiry was dropped did not establish an evil consequence within West Bengal. Having regard to the factual matrix, the Court concluded that no part of the cause of action sufficiently accrued within the jurisdiction of the Calcutta High Court and that the doctrine of forum conveniens did not support entertaining the petition here.The writ petition is not maintainable before the Calcutta High Court for want of territorial jurisdiction and is dismissed.Final Conclusion: Writ petition dismissed for want of territorial jurisdiction; observations are confined to jurisdictional aspects and not on merits; no order as to costs. Issues Involved:1. Maintainability of the writ petition before the Calcutta High Court.2. Territorial jurisdiction under Article 226 of the Constitution of India.Issue-wise Detailed Analysis:1. Maintainability of the writ petition before the Calcutta High Court:The respondent authorities raised a preliminary objection regarding the maintainability of the writ petition. They argued that since the investigation was being conducted by the respondent no.1 at Kochi, Kerala, the writ petition before the Calcutta High Court was not permissible. The Court decided to address this preliminary point before delving into the merits of the case.The petitioner, a non-banking Finance Company with its registered office in Kolkata, received several summons and notices from the Commissioner of Service Tax at Kolkata and the Assistant Director, Directorate General of Central Excise Intelligence at Kochi. The petitioner contended that the inquiry should be conducted by the Kolkata Zonal Unit due to their centralized registration under the Kolkata Service Tax Commissionerate. The petitioner sought a declaration that the inquiry initiated by the respondent no.1 was illegal and without jurisdiction, along with ancillary prayers for quashing the summons and proceedings.2. Territorial jurisdiction under Article 226 of the Constitution of India:The petitioner argued that since the summons were served at their registered office in Kolkata and replies were made therefrom, a part of the cause of action arose within the territorial jurisdiction of the Calcutta High Court. They relied on several judgments, including *Kusum Ingots & Alloys Ltd. vs. Union of India* and *Canon Steels P. Ltd. vs. Commissioner of Customs (Export Promotion)*, to support their contention that even a fraction of the cause of action within the Court's jurisdiction would make the writ petition maintainable.The respondents countered that the proceedings were initiated in Kochi, and mere replies to summons from Kolkata did not constitute a cause of action within the jurisdiction of the Calcutta High Court. They argued that the recording of statements at the registered office did not confer jurisdiction under Article 226(2) of the Constitution.The Court examined the concept of cause of action, referencing the Supreme Court's judgment in *Kusum Ingots & Alloys Ltd.*, which defined cause of action as material facts necessary for the plaintiff to prove to support their right to judgment. The Court noted that the facts pleaded in the writ petition must have a nexus to the prayer sought and not be unrelated.The Court also considered the doctrine of forum conveniens, as discussed in the larger bench decision in *Sterling Agro Industries Ltd. vs. Union of India*. The Court concluded that the mere issuance of notices or replies from the registered office did not constitute a cause of action within its jurisdiction. Additionally, the Court found that no infringement of constitutional rights was alleged, and the petitioner's compliance with the summons indicated that the core issue was the reopening of an investigation already concluded by respondent no.3.Ultimately, the Court dismissed the writ petition for lack of territorial jurisdiction, emphasizing that none of the observations made should be construed as comments on the merits of the disputes raised. The Court also noted that there would be no order as to costs and allowed for urgent certified copies of the judgment to be provided to the parties on a priority basis.