Applicability of High Court Decision in other jurisdiction

[Shyam Naik]

There was delay in filing R3B. Department demanded interest on the cash component. The RTP submitted that interest not applicable merely for late filing of return relying on Arya Cotton Industry case (2024 (7) TMI 239 - GUJARAT HIGH COURT). Department served SCN stating judgment rendered by Gujarat High Court applicable in the state of Gujarat only and not enforceable in the state of Jharkhand. The ratio of the judgment cannot be applied in the state of Jharkhand unless pronounced by the Supreme Court.

It appears that judgment / interpretation by a High Court on a Central Legislation (CGST in this case) are applicable in all other jurisdiction unless there is contradictory judgment by the jurisdictional High Court. Is there is any judgment etc. on the subject.

[Sadanand Bulbule]

Though the technical interpretation of the officer sounds well, it is not in good taste and unacceptable. Such judgements have always persuasive value. Being quasi-judicial authoirty, he is supposed to follow the ratio of any High Court judgement, if it covers the similar facts. This is not barred under the GST Act.

[Sadanand Bulbule]

Sun Export Corporation v. Collector of Customs, Bombay, (1997 (7) TMI 117 - SUPREME COURT (LB):

“In the absence of a decision from the jurisdictional High Court, the law laid down by another High Court should be followed unless there is a contrary view.”

[YAGAY andSUN]

In Indian constitutional law, the jurisdiction of a High Court is primarily territorial, even when the matter involves a central enactment. Under Article 226 of the Constitution, High Courts are empowered to issue writs within their territorial limits. This jurisdiction is confined to persons or authorities located within the State or if the cause of action arises wholly or partly within the State. Therefore, a High Court’s decision, even on the interpretation of a central law, is not binding on other High Courts. It has only persuasive value outside its territorial jurisdiction unless the Supreme Court affirms it.

When a High Court interprets a central enactment, such as an act passed by Parliament, that interpretation applies within the territorial boundaries of that court. Other High Courts may choose to follow such interpretations, but they are not obligated to do so. This principle stems from the federal structure of Indian judiciary, where High Courts function independently within their respective jurisdictions. The Supreme Court, under Article 141, is the only court whose decisions are binding on all courts in India.

For instance, in M/S R.M.D.C. (Mysore) v. State of Mysore (1961 (8) TMI 29 - SUPREME COURT), the Supreme Court clarified the interplay between central and state legislation under Article 252, reinforcing that a State’s legislative power is not surrendered merely by adopting central law. Similarly, in Waryam Singh v. Amarnath (1954 (1) TMI 29 - SUPREME COURT), and Shalini Shyam Shetty v. Rajendra Shankar Patil [(2010 (7) TMI 877 - SUPREME COURT], the scope of High Courts supervisory jurisdiction under Article 227 was discussed, confirming their power is confined to their own territorial authority.

Moreover, if a central statute explicitly excludes civil or High Court jurisdiction (as seen in tribunal-related legislation), the courts must respect that bar unless challenged on constitutional grounds. The Supreme Court has also held that State legislatures cannot affect the jurisdiction of the Supreme Court or High Courts by enacting laws that bypass constitutional provisions.

In summary, while High Courts can interpret central laws, their rulings are territorially confined. Such decisions are not binding nationwide unless upheld by the Supreme Court. This preserves the hierarchical and federal structure of judicial authority in India.

[Sadanand Bulbule]

 I welcome the text-book reply of Yagay & Sun Sir.

[KASTURI SETHI]

The departments stand is correct. 

[Shyam Naik]

Beg to differ atleast in Central revenue matters. In case revenue doesn"t accept the verdict, it is open to challenge before Supreme Court.

In case, the judgment is accepted by the Committee of Commissioners, it should be applicable in all jurisdiction, more so if the Commissioners are holding post/ posted at different states.

True that a High Court is not bound by judgment of another High Court, but the High can differ by reasoned order only.

It appears that, unless there is a contradictory judgment by jurisdictional High Court, the judgment of Hon"ble Gujarat High Court should prevail.

 

[KASTURI SETHI]

Beg to differ atleast in Central revenue matters. In case revenue doesn't accept the verdict, it is open to challenge before Supreme Court.

Ans. Yes. If any judgement is not aligned with GST laws, the department challenges the same with the Apex Court.

In case, the judgment is accepted by the Committee of Commissioners, it should be applicable in all jurisdiction, more so if the Commissioners are holding post/ posted at different states.

Ans. You are right. This practice is already being followed. Review Branch and Law Branch have been created for this purpose in each Commissionerate. 

True that a High Court is not bound by judgment of another High Court, but the High Court can differ by reasoned order only.

Ans. The Courts do not make laws. They interpret law. The possibility of difference of opinion cannot be ruled out. 

It appears that, unless there is a contradictory judgment by jurisdictional High Court, the judgment of Hon'ble Gujarat High Court should prevail.

Ans. You must check the status of Gujarat High Court Judgement. IN CASE it has been accepted by the jurisdictional Commissionerate, then you have a case to contest de jure.

Whether any judgement is to be accepted or not, there is system in each Commissionerate. Permission/approval is also got from the Board and, if required from Ministry of Law, Govt. of India. 

[Shilpi Jain]

In case of a central legislation - Any HC decision would be binding in your State as well unless there is a contrary decision of the HC of your State.

[Shilpi Jain]

Though you may note that in general - forget about HC decisions - Department does not follow SC decisions also. They will always have their own reasons for it.

[Shyam Naik]

"They will always have their own reasons for it."

Now a days they they do not have their own reasons. There is a trend of issuing AI generated SCN / Orders. 

AI Summary

Following other High Court CGST rulings in tax disputes when no local precedent exists, unless contrary view; Supreme Court not required. High Court decisions interpreting the CGST Act are treated as territorially binding only within that High Court's jurisdiction, and have persuasive value in other States unless adopted or followed. Where there is no decision of the jurisdictional High Court on the point, it is stated that quasi-judicial tax authorities should ordinarily follow the ratio of another High Court on identical facts unless a contrary view exists; reliance is placed on the Supreme Court's observation in Sun Export Corporation that, absent a jurisdictional High Court ruling, another High Court's view should be followed unless there is a contrary view. The department's contrary position is that enforcement in another State requires affirmation by the Supreme Court, with Article 141 making Supreme Court rulings binding nationwide.