764/CBDT. - Income Tax - 764/CBDT

Instruction No: 764/CBDT Date of Issue: 23/9/1974 Occasions are not rare where assessees plead ignorance of law for their failure to comply with the provisions of Revenue laws. In certain circumstances, the Courts have also accepted such pleas as valid. This question came up for consideration before the Supreme Court in a sales tax matter in the case of M/S Swadeshi Cotton Mills Co. Ltd. Vs Govt. of Uttar Pradesh and others (CTR (SC) 1974 page 9). In this case their Lordships have remarked, inter alia as under: "Every individual is deemed to know the law of the land. The Courts merely interpret the law and do not make law. Ignorance of law is not an excuse for not taking appropriate steps within limitation. Therefore, the argument that the appellant did not know the true legal position is not one that can be accepted in law." 2. Copy of the full text of the judgment is printed below for information and ready reference. 3. The officers in your charge may please be informed of the above Supreme Court decision. Extracts of Judgment of the Supreme Court in the Swadeshi Cotton Mills Co. Ltd. Versus the Government of U.P. and others Hegde, J- This is an appeal by special leave. It is directed against the decision of the Allahabad High Court in a writ petition under Art. 226 of the Constitution. The petitioner was assessed to tax under the U.P. Sales-tax Act some time in 1949 in respect of the assessment years 1948-50. He did not go up in appeal against those orders. He accepted the orders of assessment and in compliance thereof, he paid the tax payable under those orders. 2. On January 24, 1956 he filed the writ petition which has given rise to this appeal. Therein, he challenged the validity of the tax imposed on him. He further prayed for an order directing the State of U.P. to refund the tax collected from him. The learned single Judge, before whom the writ petition came, dismissed the same on three grounds, viz. (1) the orders impugned were made prior to January 26, 1950, and hence their validity cannot be challenged under Art 226 of the Constitution: (2) even according to the petitioner, there was an adequate alternative remedy and hence he should not be permitted to invoke the extraordinary jurisdiction of the High Court; and (3) the petitioner was guilty of laches and hence he is not entitled to invoke the jurisdiction of the High Court under Art 226 of the Constitution. 3. We do not think that in this case it is necessary for us to consider whether Art 226 can be used for challenging the validity of the orders passed prior to January 26, 1950. But we are in agreement with the High Court on the other two grounds. As mentioned earlier, the impugned assessments were made in 1949. The writ petition was filed in 1956. The explanation given by the petitioner for this long delay is that he did not know the correct legal position and he came to know about the same after the decision of the Allahabad High Court in the Commr. of Sales-Tax U.P. Vs. Modi Food Products Ltd. (1). Every individual is deemed to know the law of the land, the courts merely interpret the law and do not make law. Ignorance of law is not an excuse for not taking appropriate steps within limitation. Therefore, the argument that the appellant did not know the true legal position is not one that can be accepted in law. That apart, even after the High Court rendered its decision in Modi Food Products case (1), the petitioner did not move the High Court for over several months. There is no satisfactory explanation for that delay. That being so, the High Court was fully justified in refusing to exercise its discretion under Act 226 of the Constitution in favour of the appellant. 4. We also agree with the High Court that the petitioner had an adequate alternative remedy by way of going up in appeal against the impugned orders. He having failed to do so, cannot be permitted to invoke the extraordinary jurisdiction of the High Court under Art. 226 of the Constitution. In this connection, we may also note that if the petitioner had instituted a suit for refund of tax, the same would have been barred by limitation. 5. In the result, this appeal fails, but taking into consideration the fact that the tax collected from him is prima facie an unlawful collection, we make no order as to costs.