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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether the notification enhancing the tax rate could validly be given retrospective effect from a date preceding its issuance, and whether such retrospectivity was sustainable under Article 14 of the Constitution of India.
Analysis: Section 60(1) of the Haryana Value Added Tax Act, 2003 empowered the State Government to make rules by notification and to give them prospective or retrospective effect. The existence of such power, however, did not by itself validate every retrospective exercise. Retrospective subordinate legislation had to be justified on reasonable grounds and could not be arbitrary. The material before the Court showed no justification for selecting an anterior date for imposing the higher rate of tax. The retrospective operation was not shown to be clarificatory, validating, or otherwise necessary to effectuate an already manifested legislative intention. In these circumstances, the retrospective levy offended the constitutional requirement of non-arbitrariness.
Conclusion: The retrospective operation of the impugned notification was invalid and unsustainable, and the issue was decided in favour of the petitioners.
Final Conclusion: The writ petition succeeded to the extent that the notification could not operate for the period prior to its issuance.
Ratio Decidendi: Even where retrospective rule-making power exists, its exercise is valid only if the retrospectivity is reasonable and non-arbitrary; an unexplained retrospective enhancement of tax liability is liable to be struck down under Article 14.
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