1. As per Article 226(1) of the Constitution, High Courts have territorial jurisdiction to issue writs to any person including government and the judgments and orders passed by them operate within such territorial limits. Article 226(2) provides that even if the seat of the government or authority is not within the territory in which jurisdiction of High Court extends, the High Court may issue orders, writs and directions to such government or authority. Reading these provisions together, it can be said that High Court can issue order or writ to any government or authority even if the same is not within its territorial jurisdiction provided cause of action has arisen within such jurisdiction.
2. It is common understanding that the rules made by way of notifications and benefits extended or withdrawn by such notifications issued by bodies like CBIC are applicable throughout India. Writ petitions may be filed for many reasons but important among them is challenge to validity of a particular statutory provision. When an authority under the Central Government like CBIC in New Delhi issues a notification having pan-India applicability and when validity of the same is questioned before High Court in a particular State by the taxpayer who is impacted by such rule or notification and the High Court quashes/sets aside such rule or notification, Can it be said that it does not exist anymore in the statute book and, therefore, all taxpayers across the country can consider the same as applicable to them as well? Can it be argued to the contrary that in respect of taxpayers located outside the territorial jurisdiction of the particular High Court, the rule or notification will continue to be applicable and they are bound to comply with the same?
3. To answer the above questions, the reliance is placed on the 3-Judges Bench of Supreme Court in the case of Kusum Ingots and Alloys Ltd. v. UOI – 2004-TIOL-117-SC-CX-LB. As per facts of the case, the appellant had registered office in Mumbai, it had taken loan from a bank in Bhopal and recovery proceedings were initiated under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act). Writ petition was filed in Delhi High Court questioning the vires of SARFAESI Act which was dismissed on the ground of lack of territorial jurisdiction. Dwelling on both territorial jurisdiction and cause of action, the Supreme Court referred to Article 226(2) of the Constitution and Section 20(c) of Civil Procedure Code and dismissed the appeal on the ground that situs of law-making body by itself would not constitute cause of action.
4. It held that a parliamentary legislation, unless specifically excluded, will apply to the entire territory of India and if passing of a legislation gives rise to a cause of action, a writ petition questioning the constitutionality thereof can be filed in any High Court but the same is not done because a cause of action will arise only when the provisions of the Act are implemented giving rise to civil or evil consequences. For the present discussion, this judgment is relevant for a different proposition. The Apex Court held that an order passed on writ petition questioning the constitutionality of a Parliamentary Act, whether interim or final, will have effect throughout the territory of India subject to the applicability of the Act.
5. Notifications in GST regime are issued based on recommendations of the GST Council. If such notification is quashed in full or in part, then it is desirable to include the same in the agenda of the meeting of GST Council. Such orders of High Court should be taken note of so that the GST Council may recommend appropriate amendments in the relevant rules and notifications. This will enable CBIC to refrain from filing appeal in such cases. After all, GST is all about one nation – one tax and this means one law as well. Therefore, tax administration cannot choose to implement a notification in certain States and keep the same in abeyance in other States because of adverse order of High Court.