Prospective tax notifications and assessees' relief when an erratum cannot retrospectively raise the applicable rate.

A taxing notification or erratum cannot be applied retrospectively to create or enhance liability for a past period unless clear authority for retroactive operation exists. The court applied the principle that taxing provisions are ordinarily prospective and that any ambiguity in the applicable rate must be resolved in favour of the assessee. On that basis, the errata to G.O. Ms. No. 304 was treated as prospective only, and the assessees were not liable to be assessed at the enhanced rate during the intervening period.

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Issues: Whether the errata issued in G.O. Ms. No. 304 could be applied retrospectively so as to fasten liability at the enhanced rate during the intervening period, and whether the rate applicable to the sale of jewellery remained at 2 per cent rather than 4 per cent in that interregnum.

Analysis: A taxing enactment is ordinarily prospective, and retrospectivity is not to be presumed unless clearly authorised. The liability to pay tax arises under the statute and is not dependent on collection from customers, but the Government cannot, by a later notification or erratum, retrospectively impose a higher burden for a period already covered by the earlier notification structure. In case of doubt about the applicable rate, the construction favourable to the assessee is to be preferred. The record also indicated that the later notification was not in effective circulation during the relevant period in a manner that would justify a contrary rate being applied.

Conclusion: The errata was held to operate only prospectively, and the petitioners were not liable to be assessed at the enhanced rate for the intervening period. The writ petitions succeeded in favour of the assessees.

Ratio Decidendi: A taxing notification or erratum cannot be given retrospective effect to create or enhance liability for a past period unless such operation is clearly authorised, and any ambiguity in the applicable rate in a taxing context must be resolved in favour of the assessee.

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