Retrospective tax amendment upheld where legislature cured the defect and validated past action instead of impermissibly overruling judgments.

A retrospective fiscal amendment to section 29 of the Punjab Value Added Tax Act was analysed as a whole and treated as applying to past assessments because the extended limitation period, proviso, and explanatory provisions showed legislative intent to cover earlier years. The amendment was also described as a valid curative and validating measure, because it removed the foundation of earlier judicial rulings on prior notice and opportunity rather than impermissibly overruling them. The constitutional objections were rejected on the basis that retrospective taxation is not invalid merely because it is harsh, and the proviso was treated as a permissible exception to the main rule.

---

---

Issues: (i) Whether the amendment to section 29(4) of the Punjab Value Added Tax Act, 2005 and the insertion of section 29(10-A) operated retrospectively; (ii) whether the amendment merely reversed judicial decisions or validly removed the basis of the earlier judgments and validated past action; (iii) whether the amendment, including explanations (1) and (2) and the proviso, was unconstitutional as harsh, arbitrary, contrary to natural justice, or inconsistent with the main provision.

Issue (i): Whether the amendment to section 29(4) of the Punjab Value Added Tax Act, 2005 and the insertion of section 29(10-A) operated retrospectively.

Analysis: The amended provision was read as a whole and not in isolation. The extended limitation of six years, the proviso allowing reassessment for the assessment year 2006-07 up to 20.11.2014, and explanation (1) referring to the aforesaid period of six years showed that the legislature intended the amendment to operate on past assessments as well. The date of commencement of the amending Act was distinct from the date of operation of the amended provision.

Conclusion: The amendment was held to be retrospective.

Issue (ii): Whether the amendment merely reversed judicial decisions or validly removed the basis of the earlier judgments and validated past action.

Analysis: The earlier decisions had proceeded on the requirement of notice and opportunity before extension of limitation under the unamended provision. The amendment, by explanation (2) and section 29(10-A), supplied the legislature's own interpretation that prior notice was not required and altered the basis on which the earlier judgments had been rendered. The Court held that a legislature may render a judicial decision ineffective by removing the foundation on which it rests, but may not directly overrule it. The impugned amendment was treated as a permissible curative and validating measure within legislative competence.

Conclusion: The amendment was held to be valid and not an impermissible legislative overruling.

Issue (iii): Whether the amendment, including explanations (1) and (2) and the proviso, was unconstitutional as harsh, arbitrary, contrary to natural justice, or inconsistent with the main provision.

Analysis: The Court held that retrospective taxation is not per se unconstitutional unless it is plainly discriminatory, confiscatory, or unduly oppressive. The possibility that some assessees may have to produce records beyond the period of statutory preservation did not render the amendment invalid. The proviso was treated as a valid exception to the general rule and was not inconsistent with the main provision. The objection based on natural justice was rejected because the retrospective amendment itself displaced the prior notice requirement.

Conclusion: The constitutional challenge to the amendment, explanations, and proviso failed.

Final Conclusion: The impugned amendment to section 29 of the Punjab Value Added Tax Act, 2005 was upheld, and the writ petition challenging the notice and the amendment was dismissed. The connected matters were to follow the same result, while other merits-based objections in those matters were left open.

Ratio Decidendi: A retrospective fiscal amendment is valid if it is within legislative competence and removes the basis of the earlier judicial decision by curing the defect or altering the legal foundation, rather than merely declaring the judgment ineffective.

---