High Court Bench's Territorial Jurisdiction for GST Matters Based on Assessee's Place of Business/Search, Not Just Adjudicating Authority's Location

I. High Court Bench’s Territorial Jurisdiction for GST Matters Based on Assessee’s Place of Business/Search, Not Just Adjudicating Authority’s Location

Issue:

Whether a High Court Bench (specifically, the Indore Bench) has territorial jurisdiction to entertain a writ petition concerning a GST matter when the assessee’s registration and place of business are within its territorial limits (Indore), and a search was conducted there, even if the adjudicating authority that passed the original order is stationed in a different city (Bhopal) which falls under the Principal Bench’s jurisdiction.

Facts:

For the period 2017-18 to 2018-19, the petitioner had GST registration and its place of business in Indore. A search was conducted at the petitioner’s office in Indore, and relevant materials were supplied and received in Indore. The adjudicating authority that passed the order in original was stationed in Bhopal. The question arose whether the Indore Bench of the High Court had jurisdiction to entertain the writ petition or if it should be filed before the Principal Bench at Bhopal. The court referenced a Division Bench judgment of the same High Court in Shrigovind Niranjan (supra).

Decision:

The court held that merely because the learned assessing authority who passed the order in original was stationed at Bhopal, it could not be held that the Bench at Indore had no jurisdiction to entertain this writ petition. Since the authority was situated in Bhopal, therefore, in view of the judgment passed by the Division Bench of this Court in the case of Shrigovind Niranjan (supra), the Principal Bench also had jurisdiction to entertain the writ petition. (It implies that both Benches had jurisdiction, but the initial reasoning favored the Indore Bench due to the situs of the business and search). The ruling was in favor of the revenue, but the reasoning clarified jurisdiction.

Key Takeaways:

Territorial Jurisdiction in Writ Petitions: For writ petitions challenging administrative actions, the High Court’s territorial jurisdiction under Article 226 of the Constitution depends on where the “cause of action” (or a part thereof) arises.
Cause of Action in GST Cases: In GST matters, the cause of action can arise where the assessee has its place of business/registration, where the goods/services are supplied/received, where the search/investigation is conducted, or where the impugned order is served.
Situs of Business vs. Adjudicating Authority: The court clarified that the location of the adjudicating authority is not the sole determinant of jurisdiction. The place where the assessee operates and where the factual basis for the dispute (like a search) arises is also a valid ground for jurisdiction.
Concurrent Jurisdiction: The reference to the “Principal Bench also has jurisdiction” suggests that in such scenarios, there might be concurrent jurisdiction, allowing the assessee to choose either the Bench where the cause of action primarily arose or the Bench within whose jurisdiction the authority is located.
Avoiding Harassment: This interpretation prevents undue hardship to assessees who might otherwise have to travel to a distant Principal Bench just because the adjudicating officer is located there, even if all their business and relevant activities are in the local Bench’s jurisdiction.

II. Denial of Cross-Examination: Appellate Authority to Examine Prejudice, Writ Petition Dismissed for Alternative Remedy

Issue:

Whether an assessee’s writ petition alleging a violation of natural justice due to the denial of an opportunity to cross-examine witnesses should be entertained when the assessee fails to prove when such a request was made, and an alternative statutory remedy of appeal is available.

Facts:

For the period 2017-18 to 2018-19, the petitioner alleged a violation of the principle of natural justice, specifically claiming that an opportunity to cross-examine witnesses was not given. However, the petitioner failed to provide evidence of when this request for cross-examination was made to the adjudicating authority. The case involved an order passed under Section 74 of the CGST Act (demand involving fraud, misstatement, or suppression).

Decision:

The court held that whether any prejudice was caused by not giving an opportunity to cross-examine witnesses is a matter liable to be examined by the appellate authority. This examination would involve looking into the record and assessing the relevancy of the witnesses’ depositions. The appellate authority would be competent to decide all issues and grounds raised in the writ petition. The court also emphasized that there should not be an avoidance of the pre-deposit condition for the entertainment of a statutory appeal. Consequently, the writ petition was dismissed.

Key Takeaways:

Cross-Examination and Prejudice: The right to cross-examine witnesses is a crucial aspect of natural justice. However, its denial does not automatically vitiate an order unless it can be shown that prejudice was caused. The determination of prejudice often requires a deeper factual analysis, including the relevance of the witness statements to the case.
Burden to Prove Request: The assessee bears the initial burden of proving that they indeed made a request for cross-examination and that such a request was denied. A mere assertion without proof is insufficient.
Appellate Authority’s Competence: The appellate authority (under Section 107 of the CGST Act) is fully competent to delve into factual aspects, including the examination of records and the impact of the denial of cross-examination on the fairness of the proceedings.
Alternative Remedy Rule: This case strongly reiterates the principle that writ jurisdiction should not be invoked when an effective alternative statutory remedy, such as an appeal, is available.
Pre-deposit Condition: The court explicitly mentioned the pre-deposit condition for statutory appeals, implying that assessees should not use writ petitions as a means to bypass this requirement for challenging demand orders.
Factual Dispute for Appellate Authority: The question of whether cross-examination was sought, denied, and caused prejudice is inherently a factual dispute best resolved by the appellate authority, which has the power to examine records and call for further information.

HIGH COURT OF MADHYA PRADESH

Goyal Trading Co.

Union of India

VIVEK RUSIA and Gajendra Singh, JJ.

WRIT PETITION Nos. 15424, 15425, 15427 and 15428 of 2025

MAY 20, 2025

Sudhir Malhotra and Vishal Lashkari, Ld. counsels for the Petitioner. Prasanna Prasad, Ld. counsel for the Respondent.

ORDER

Vivek Rusia J.- Since the subject matter of these writ petitions is identical in nature, with the joint request of the parties, they are analogously heard and being decided by this common order. For the sake of convenience, facts of Writ Petition No.15428 of 2025 are being taken into consideration as under:-

1. The petitioner has filed the present petition under Article 226 of the Constitution of India challenging the order date 19.12.2024, i.e. an order in original passed by the Additional Commissioner, office of Principal Commissioner of Central Goods & Service Tax and Central Excise, Bhopal pertaining to Tax Period – 2017 – 18 to 2018 – 19, whereby the recovery of Input Tax Credit (ITC), interest and penalty have been imposed on the petitioner and other noticees.

2. An investigation was conducted by DGGI, Bhopal Unit against M/s R.A. Enterprises on intel of availing the fake/bogus ITC and passing on the same to its various recipients, amounting to Rs 1,39,03,814/-, having taxable value of Rs 7,72,43,380/-. After the search, show-cause notices were issued to as many as 18 noticees; (i) under Section 74 of the Central Goods & Service Tax Act, 2017 (in short ‘the CGST Act’) r/w section 20 of the Integrated Goods & Service Tax Act, 2017 (in short ‘the IGST Act’); and (ii) Section 122(1)(ii) of the CGST Act r/w section 20 of the IGST Act. All the noticees participated in the assessment proceedings before the competent authority i.e. the Additional Commissioner. Now the Assistant Commissioner has passed the Order in Original (O.I.O.) dated 19.12.2024 against the petitioner and others.

3. Instead of availing the remedy of appeal under Section 107 of the CGST Act, the petitioner has approached this Court by way of writ petition under Article 226 of the Constitution of India inter alia, on the ground that the order in original has been passed in gross violation of the principle of natural justice.

4. Learned Counsel appearing for the petitioner submits that respondent No.3 did not allow cross-examination of the witnesses relied on and did not consider the submissions and grounds raised by the petitioner. Learned Counsel further submits that respondent No.3 erred in issuing the common notice dated 02.08.2024 for different financial years. In support of the aforesaid contention, learned Counsel has placed upon several judgment delivered in the cases of Bharat Mint & Allied Chemicals v. Commissioner of Commercial Tax (Allahabad), Andaman Timber Industries v. CCE (324) E.L.T. 641 (S.C.), Century Textile & Ind. Limited v. Union of India 2008 (232) E.L.T. 389 (Bom.), Nishad K.U. v. Joint Commissioner Central Tax and Central ExciseKerala)/WP (C) No. 26732 of 2024, D.Y. Beathel Enterprises v. State Tax Officer (DATA Cell)GST 400/58 GSTL 269 (Madras), Titan Company Limited v. Joint Commissioner of GST and Central Exciseneutral citation 2024 — TIOL — 131 — HC — MAD – GST (W.P. No.33164 of 2023), Joint Commissioner (Intelligence & Enforcement) Office of the Joint Commissioner of (Intelligence & Enforcement), SGST Department v. Lakshmi Mobile Accessorites (Kerala)/(W.A. No.258 of 2025) and Ace Cardiopathy Solutions Private Limited v. Union of India6758/2024 to show that the writ petition under Article 226 of the Constitution of India is maintainable against the order in original.

5. Learned counsel appearing for the respondents submits that the writ petition is not maintainable due to the availability of an efficacious statutory remedy of appeal. Learned counsel submits that the petitioner, in order to avoid the deposit of 10% of the tax under recovery, has approached this Court by way of writ petition. Learned counsel further submits that the Assistant Commissioner, Bhopal, has passed the final OIO, therefore, the writ petition is not maintainable. In support the aforesaid contention, Shri Prasad, learned counsel has placed reliance upon judgments delivered by the Apex Court in the case of State of Maharashtra v. Greatship (India) Limited as well as Division Bench of this Court in the case of Shrigovind Niranjan v. State of Madhya Pradesh Neutral Citation — 2024: MPHC – JBP:56995 [Writ Appeal No. 2228 of 2023, dated 14-11-2024].

6. We have heard learned counsel for the parties at length and perused the record.

7. So far as the territorial jurisdiction is concerned, this issue is no more res integra. The Division Bench of this Court in the case of Shrigovind Niranjan (supra) has held that the expression ’cause of action’ used in Clause (2) of Article 226 of the Constitution of India indisputably even if the small fraction thereof accrues within the jurisdiction of the Court, the Court will have jurisdiction in the matter through the doctrine of forum conveniens may also have to be considered.

8. In the present case, the petitioner is having registration of GSIT as well as the place of business at Indore. The search was conducted in the office situated at Indore, the materials in question were supplied and received in Indore, therefore, merely on the ground that the learned assessing authority who has passed the order in original is stationed at Bhopal, it cannot be held that this Bench at Indore has no jurisdiction to entertain this writ petition. Since the authority is situated in Bhopal, therefore, in view of the judgment passed by the Division Bench of this Court in the case of Shrigovind Niranjan (supra), the Principal Bench also has jurisdiction to entertain the writ petition.

9. So far as the issue of maintainability of writ petition due to availability of remedy of appeal is concerned, it is not in dispute that the writ petition is maintainable in certain circumstances like where there is complete lack of jurisdiction, where vires of act / rules / notification has been challenged, where an order has been passed in total violation of principle of natural justice etc.

10. The petitioner is alleging the violation of principle of natural justice solely on the ground that the opportunity to cross-examine the witnesses was not given. The petitioner has failed to point out when the request was made for cross-examination of the witnesses. By not giving an opportunity to cross-examine the witnesses, whether any prejudice was caused, is liable to be examined by the appellate authority after examining the record and the relevancy of the deposition of the witnesses. The appellate authority would be competent to decide all the issues and grounds raised in the writ petition. There should not be an avoidance of pre-deposit condition for the entertainment of a statutory appeal.

11. The Apex Court in the case of Greatship (India) Limited (supra) has held that the High Court has seriously erred in entertaining the writ petition under Article 226 of the Constitution of India against the assessment order and ought to have relegated the writ petitioner to avail the statutory remedy of appeal. Paragraphs 14 to 17 of the aforesaid judgment are reproduced below:-

”14. Applying the law laid down by this Court in the aforesaid decision, the High Court has seriously erred in entertaining the writ petition under Article 226 of the Constitution of India against the assessment order, bypassing the statutory remedies.

15. Now so far as the reliance placed upon the decisions of this Court by the learned Senior Advocate appearing on behalf of the respondent, referred to hereinabove, are concerned, the question is not about the maintainability of the writ petition under Article 226 of the Constitution, but the question is about the entertainability of the writ petition against the order of assessment by-passing the statutory remedy of appeal. There are serious disputes on facts as to whether the assessment order was passed on 20.03.2020 or 14.07.2020 (as alleged by the assessee). No valid reasons have been shown by the assessee to by-pass the statutory remedy of appeal. This Court has consistently taken the view that when there is an alternate remedy available, judicial prudence demands that the court refrain from exercising its jurisdiction under constitutional provisions.

16. In view of the above facts and circumstances of the case, the High Court has seriously erred in entertaining the writ petition against the assessment order. The High Court ought to have relegated the writ petitioner—assessee to avail the statutory remedy of appeal and thereafter to avail of other remedies provided under the statute.

17. Under the circumstances, the impugned judgment and order passed by the High Court are hereby quashed and set aside. The writ petition filed before the High Court challenging the assessment order and consequential notice of demand of tax is hereby dismissed. The respondent-assessee is relegated to avail the statutory remedy of appeal and other remedies available under the MVAT Act and CST Act. It is directed that if such a remedy is availed within a period of four weeks from today, the appellate authority shall decide and dispose of the same on its own merits in accordance with law without raising any question of limitation, however, subject to fulfilling the other conditions, if any, under the statute. It is made clear that we have not expressed any opinion on the merits of the case in favour of either of the parties and it is for the appellate authority and/or appropriate authority to consider the appeal/proceedings on its/their own merits and without being influenced in any way by any of the observations made by the High Court which otherwise have been set aside by the present order. The present appeal is allowed in the aforesaid terms. However, in the facts and circumstances of the case, there shall be no order as to costs.”

[Emphasis Supplied]

12. In view of the above, all the Writ Petitions stand dismissed with liberty to the petitioner to approach the appellate authority.