Territorial jurisdiction in refund suits depends on the statutory refund process, not mere cheque encashment elsewhere.

The Calcutta High Court lacked territorial jurisdiction over a refund suit because the statutory refund scheme required applications to be made to the Commissioner in Bihar and payment through the prescribed treasury process there. The assessments were treated as valid under article 286(2), the Sales Tax Continuance Order, 1950, and section 2 of the Sales Tax Laws Validation Act, 1956, so the payments could not be characterised as made under a mistake of law. The appellate authority's refund-related order did not relocate the cause of action to Calcutta, and the encashment of cheques in Calcutta was insufficient to found jurisdiction.

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Issues: Whether the Calcutta High Court had territorial jurisdiction to entertain the suit for refund, and whether the plaintiff could rely on the encashment of cheques or the appellate authority's refund-related order to found part of the cause of action in Calcutta.

Analysis: The assessments for the relevant years were examined in the light of the constitutional position under article 286(2), the Sales Tax Continuance Order, 1950, and section 2 of the Sales Tax Laws Validation Act, 1956. The assessment for 1950-51 was held to be valid, and the remaining assessments were also covered by the validating provision, with retrospective effect from 1 April 1951. On that basis, the payments could not be treated as having been made under a mistake of law. The claim founded on the appellate authority's order was also considered, but the statutory refund machinery under rules 40 to 43 required refund applications to be made before the Commissioner in Bihar and refund payment to be made through the prescribed treasury process. The appellate authority's order did not shift the cause of action to Calcutta. The encashment of cheques at Calcutta was insufficient to sustain territorial jurisdiction for a suit grounded on refund under the statutory scheme.

Conclusion: The Calcutta High Court had no territorial jurisdiction to entertain the suit, and the plaintiff was not entitled to succeed on the refund claim in that forum.

Ratio Decidendi: Where a statutory refund is governed by a prescribed procedure requiring application and payment within a particular State, encashment of cheques elsewhere does not by itself create territorial jurisdiction; a civil court cannot assume jurisdiction on a tenuous or untenable part of the cause of action.

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