Revisional orders under VAT law operate prospectively only when they unsettle an earlier binding clarification.

Under the Karnataka Value Added Tax Act, 2003, a clarification issued under Section 60 was binding on both the assessee and the department for the goods and transaction covered by it. Where the Commissioner later exercises revisional power under Section 64(2), the revised order cannot unsettle a position already acted upon by the assessee with retrospective effect. If the revisional order is adverse, it operates only prospectively from the date of the order and does not take effect from an earlier date.

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Issues: Whether the Commissioner's order revising the clarification under Section 64(2) of the Karnataka Value Added Tax Act, 2003 could operate retrospectively.

Analysis: The clarification earlier issued under Section 60 of the Karnataka Value Added Tax Act, 2003 was binding on the assessee and the departmental in relation to the goods and transaction covered by it. The challenge was confined to the effect of any order passed by the Commissioner pursuant to the notice under Section 64(2). Relying on the earlier Division Bench view, the Court held that even where the Commissioner validly exercises revisional power, the revised order cannot unsettle the position already acted upon by the assessee with retrospective effect. The revisional order, if adverse, would take effect only from the date of the order and not from an earlier date.

Conclusion: The Commissioner's order, if passed against the assessee, would be prospective only and not retrospective.

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