SC Confirms Prospective Application of Amended Tax Rules, Allows Challenges to Pre-2017 Assessments Under Old Rules.

The SC upheld the HC's decision that the amended provision should apply prospectively. It confirmed the validity of assessments based on unamended rules, allowing the department to complete such assessments, subject to challenge by assessees. The SC emphasized the State's obligation to finalize assessments for periods before 01.07.2017 under unamended rules, while post-01.07.2017 assessments should follow the new regime. The special leave petitions and pending applications were disposed of, maintaining the possibility for assessees to contest assessments before the appropriate forum.

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Issues:
1. Interpretation of amended provision for prospective effect.
2. Validity of assessment based on unamended rules.
3. Obligation of the State for assessment process pre and post 01.07.2017.

Analysis:
1. The Supreme Court addressed the issue of the interpretation of the amended provision and its prospective effect. The Court agreed with the conclusion of the High Court that the amended provision can be given prospective effect only. The direction in question was based on the High Court's conclusion, and the Court found no need for further consideration on this matter.

2. The Court considered the validity of assessments conducted based on unamended rules. The petitioners argued that the department could continue assessments using the unamended rules, even without reference to the amended provision. The Court noted that this argument was not raised before the High Court. It was clarified that if the department has the legal provision to complete assessments using unamended rules, they are permitted to do so. However, any such action can be challenged by the concerned assessee before the appropriate forum, leaving all contentions open for both sides.

3. The Court highlighted the statutory obligation of the State regarding the assessment process before and after 01.07.2017. It was pointed out that the State is obligated to conclude assessments for the period before 01.07.2017 based on unamended rules, while assessments for the subsequent period should follow the new regime effective from 01.07.2017. The Court reiterated that the department is free to proceed with assessments using unamended rules, subject to challenge by the assessees before the appropriate forum. The special leave petitions were disposed of accordingly, and pending applications were also disposed of by the Court.

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