Prospective tax amendment rule keeps amended VAT liability from applying retrospectively, while input tax credit adjustment remains available.

An amendment to Section 3(4)(b) of the Tamil Nadu VAT Act was treated as prospective, because the amending Act did not specify a retrospective date and commencement was notified only from 01.04.2012; the liability therefore had to be tested against the law in force during the relevant assessment years, and the petitioner could not rely on the amended provision for 2010-2011 and 2011-2012. The demand under Section 3(4)(b) was sustained, but the Court granted limited relief by directing reconsideration of the assessments for adjustment of input tax credit available under the applicable law and issuance of revised orders on that aspect.

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Issues: (i) Whether the amendment to Section 3(4)(b) of the Tamil Nadu Value Added Tax Act, 2006 was clarificatory and retrospective so as to apply to the assessment years 2010-2011 and 2011-2012; (ii) whether the petitioner was entitled to adjustment of input tax credit while sustaining the demand under Section 3(4)(b).

Issue (i): Whether the amendment to Section 3(4)(b) of the Tamil Nadu Value Added Tax Act, 2006 was clarificatory and retrospective so as to apply to the assessment years 2010-2011 and 2011-2012.

Analysis: The unamended provision required a dealer crossing the turnover threshold of fifty lakhs to pay tax under Section 3(2), while the 2011 amendment substituted the language of clause (b). The amending Act received assent on 26.09.2011, and the Government notified 01.04.2012 as the date of commencement under Section 1(2). The absence of any express retrospective date, together with the notified prospective commencement, indicated that the amendment was intended to operate only from 01.04.2012. The principle that fiscal legislation ordinarily applies as it stands during the relevant assessment period also weighed against retrospective application.

Conclusion: The amendment was held to be prospective and not retrospective; the petitioner was not entitled to invoke it for the assessment years in question.

Issue (ii): Whether the petitioner was entitled to adjustment of input tax credit while sustaining the demand under Section 3(4)(b).

Analysis: The Court upheld the demand under Section 3(4)(b) but noted that the petitioner had not been given the benefit of input tax credit available under the law as it stood during the material period. Limited interference was therefore warranted only to the extent of enabling adjustment of the input tax credit and passing revised assessment orders on that aspect alone.

Conclusion: The demand was sustained, but the matters were remitted for the limited purpose of granting input tax credit adjustment and issuing revised assessment orders.

Final Conclusion: The writ petitions were not accepted on the challenge to the tax demand, but partial relief was granted by remitting the matters for reconsideration confined to input tax credit adjustment.

Ratio Decidendi: An amendment in a taxing statute will not be treated as retrospective or clarificatory in the absence of express legislative indication or a notified commencement from an anterior date, and the liability must be determined by the law in force during the relevant assessment period.

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