Retrospective withdrawal of a tax concession cannot unsettle completed assessments or vested rights absent express statutory authority.

An executive circular cannot retrospectively withdraw a concession already acted upon and thereby reopen completed assessments unless the statute expressly permits retrospective operation. The earlier circular had been relied on by assessees to arrange purchases and tax treatment, so the later circular could not nullify accrued rights from its original date. Retrospective recovery was held unjust where assessees had been prevented from passing the tax burden on to customers under the earlier regime. Completed assessments made on the basis of the earlier circular were therefore not reopenable for the prior period, while the substantive classification issue for the future period remained open for the assessing authority.

---

---

Issues: Whether the circular dated 2 September 2005 cancelling the earlier circular dated 19 February 2001 could operate retrospectively so as to reopen completed assessments and withdraw the concession already acted upon by the assessees.

Analysis: The earlier circular had clarified the tax position and the assessees had altered their position on that basis by purchasing fuel at the concessional rate and arranging their affairs accordingly. The later circular sought to nullify the earlier circular from its original date, which would affect concluded transactions and completed assessments. The Court held that the Commissioner had no power under the Act or the Rules to issue a circular with retrospective effect so as to take away existing rights created under the earlier circular. The Court further held that, where the assessees had been prevented from recovering tax from their customers under the earlier regime, retrospective recovery would be unjust and impermissible.

Conclusion: The circular dated 2 September 2005 could not operate retrospectively, and completed assessments made on the footing of the circular dated 19 February 2001 could not be reopened for the prior period.

Final Conclusion: The petitions succeeded to the extent that retrospective withdrawal of the earlier concession was disallowed, while the substantive question whether the fuels used by the assessees fell within the relevant exempt category for the future period was left open for determination by the assessing authority.

Ratio Decidendi: An executive circular cannot retrospectively withdraw a benefit already acted upon and thereby unsettle completed assessments or vested rights unless the statute expressly authorises such retrospective operation.

---