Retrospective Operation of Amendments in Taxing Statues vis-à-vis Judicial Decisions

Abstract

The cardinal principle of interpretation of a taxing statute is that every statute is prospective unless it is expressly stated that it is retrospective. The term retrospective means operating from a date in the past or taking effect from a past date. Thus, a taxing statute is said to have retrospective operation only when it is expressly or by necessary implication states that it will operate from a date in the past. The Indian revenue in spite of this settled principle of interpretation often tends to retrospectively impose tax for the purpose of gaining revenue. In addition to this, the Indian government has many times made retrospective amendments in the disguise of clarificatory and declaratory amendments. However, the Indian judiciary has always been the saviour of these kind of interpretations and amendments. The judiciary has given different principles both in favour of and against retrospective operation of taxing statutes. Thus, this paper first of all tries to identify the principles against and in favour of retrospective operation of taxing statutes. Then it explains about how a declaratory or clarificatory amendment of a taxing statute should be interpreted. Finally, it points out the rules laid down by the judiciary on retrospective operation of taxing statutes. Keywords: Clarificatory amendments, Declaratory amendments, Judicial rulings, Principles of interpretation, Retrospective operation.