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TMI Blog1971 (10) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... as delivered by HEGDE, J.- The respondent-original plaintiff (which will hereinafter be referred to as the "plaintiff") is a company having its registered office at Calcutta. It was a registered dealer under the Bihar Sales Tax Act, 1947, (in brief the Act). On or about December 14, 1953, the plaintiff issued a cheque to the defendant-appellant for a sum of Rs. 10,000 drawn on the Oriental Bank of Commerce Ltd., Calcutta, towards the sales tax due from it for the years 1950-51, 1951-52 and 1952-53. That cheque was sent to Calcutta for encashment and encashed at that place. On September 25, 1954, the Assistant Superintendent of Sales Tax passed assessment orders in respect of the years mentioned earlier. According to those orders, the plaintiff was liable to pay sales tax amounting to Rs. 2,803-2-0 in respect of the year 1950-51; Rs. 3,670-5-0 for the year 1951-52; Rs. 4,623-6-0 for the year 1952-53; thus a total of Rs. 11,096-13-0. As seen earlier, it had already paid a sum of Rs. 10,000 earlier. On July 23, 1955, it paid the balance of Rs. 1,096-13-0; this again by a cheque on the bank mentioned earlier. This was also encashed at Calcutta. Aggrieved by the assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Sales Tax, Dhanbad, for refund of the tax paid by him. This claim was made on the basis of the appellate order. On January 30, 1956, Sales Tax Laws Validation Ordinance (No. 3 of 1956) was issued which was followed up by the Sales Tax Laws Validation Act, 1956. The scope of this Act was considered by this court in M. P. V. Sundararamier Co. v. State of Andhra Pradesh [1958] 9 S.T.C. 298 (S.C.); [1958] S.C. R. 1422. Therein this court by majority held that the Sales Tax Laws Validation Act, 1956, is in substance one lifting the ban on taxation of inter-State sales and is within the authority conferred on Parliament under article 286(2) and further that under that provision it was competent to Parliament to enact a law with retrospective operation. Therein this court further held that section 2 of the Sales Tax Laws Validation Act validates not only levies already collected but also authorised the imposition of tax on sales falling within the Explanation which had taken place within the period specified in section 2. It was also held that the Act was not a temporary one though its operation is limited to sales taking place within a specified period. Evidently because of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plaintiff. He came to the conclusion that in view of section 2 of the Sales Tax Laws Validation Act, the levy and collection must be held to he valid despite the order of the appellate authority. Aggrieved by that decision the plaintiff took up the matter in appeal to a Division Bench of the Calcutta High Court and the appeal was heard by a Division Bench consisting of Bachawat, J. (who later became a Judge of this court) and Arun K. Mukherjee, J. The learned Judges of the Division Bench allowed the appeal in full. On the question whether any part of the cause of action arose in Calcutta, differing from the view taken by Ray, J., they held that the doctrine that the debtor must find out his creditor and pay the debt did not apply to the facts of this case because of the rules framed under the Act under which the refund claimed can only be made inside Bihar. But all the same the learned judges came to the conclusion that as the cheques issued by the plaintiff were encashed at Calcutta, part of the cause of action must be held to have arisen in Calcutta; therefore, the Calcutta High Court had jurisdiction to entertain the suit. On merits the learned Judges came to the conclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India as that article stood then. In view of that Order, it cannot be said that the assessment made for the year 1950-51 is violative of article 286. The validity of the above-referred order has not been challenged before us. Hence our conclusion is that the assessment in respect of the year 1950-51 was validly made. Now coming to the validity of the assessments made for the second period, the same is fully covered by the validating provisions contained in section 2 of the Sales Tax Laws Validation Act. This section has been given retrospective effect as from April 1, 1951. Therefore we have to proceed on the basis of the fiction that the provisions of the Act relating to levy of tax on inter-State sales have all along been valid provisions. This position is made clear by the decision of this court in Sundararamier's case [1958] 9 S.T.C. 298 (S.C.); [1958] S.C.R. 1422. From the above discussion it follows that if the assessments made by the assessing authority are examined solely on the basis of law, there is no ground for coming to the conclusion that those assessments are invalid assessments. If they are not invalid assessments then the plaintiff's case that he made the payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the law. Hence, in our opinion, the fact that the cheques issued by the plaintiff were encashed in Calcutta could not have afforded any cause of action for filing the suit in the Calcutta High Court. Assuming, but not deciding, that the fact of encashment of cheques in Calcutta gave rise to a cause of action at Calcutta for a claim based on the ground that the payments were made on a mistaken impression of law, but that circumstance cannot be said to give rise to a cause of action for the suit on the ground that the plaintiff is entitled to the refund of the amounts paid because of the appellate authority's order. In our judgment the High Court failed to keep apart the two questions, namely, the claim for the return of the amount paid on the basis that it was paid under a mistaken impression of the law and the claim made in pursuance of the order of the appellate authority. The payments made by the plaintiff by cheques have nothing to do with the appellate authority's order. They have not been made on the basis of that order. They were made on the basis of the original assessments. The only ground on which the High Court has come to the conclusion that the plaintiff is entitl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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