Prospective vs. Retrospective

The cardinal principal of the tax law is that the amendment is to be applied from the date when the amendment comes in i.e. prospectively. The rule applies to the charging section and other substantive provision such as provision imposing penalty and however does not apply to theprocedural law of a taxing statute which are generally retrospective and apply even to the pending proceedings.Thus the amendment which affect to the existing rights or creating new obligations is constitute to be applied prospectively only.

The Supreme Court has reiterated the same in VatikaTownship reported in [TS-573-SC-2014-O], however the above cardinal principal will not apply when it is a beneficial provision and the Supreme Court in Vatika case (supra) has stated that:

"Where a benefit is conferred by a legislation, the rule against the retrospective construction is different. If a legislation are confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislator object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given at retrospective effect. This exactly is the justification to treat procedural provisions as retrospective. Where a law is enacted for the benefit of community as a whole, even in the absence of a provision the statute may be held to be retrospective in nature.

We would also like to point out, for the sake of completeness, that where a benefit is conferred by a legislation, the rule against a retrospective construction is different. If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally, and where to confer such benefit appears to have been the legislators object, then the presumption would be that such a legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This exactly is justification to treat procedural provision as retrospective. In Government of India V/s Indian tobacco Association, the doctrine of fairness was held to be relevant factor to construe a statute conferring a benefit, in the context of it to be given a retrospective operation. The same doctrine of fairness, to hold that a statute was retrospective in nature, was applied in the case of Vijay V/s state of Maharashtra. It was held that where a law is enacted for the benefit of community as whole, even in the absence of a provision the statute may be held to be retrospective in nature. However we are confronted with any situation here.

In such cases retrospectively is attached to benefit the person in contradistinction to the provision imposing some burden or liability where the presumption attaches towards prospectively. In an instant case, the proviso added to sec. 113 of the act is not beneficial to the assesses. On the contrary, it is a provision which is onerous to the assesses. Therefore, in case like this we have to proceed with the normal rule of provision against retrospective operation. Thus, the rule against retrospective operation is a fundamental rule of law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act or arises by necessary and distinct implication. Dogmatically framed the rule is no more than a presumption, and thus could be displaced but outweighing factors."

This is an Excerpt from the article in the link below : http://orange.taxsutra.com/articles/f43c125f7b056bf68e5ecc8a83511b/expert_article