Retrospective fiscal validation upheld as the MVAT incentive amendment cured the earlier statutory defect without creating a fresh levy.

The SC upheld the retrospective amendment to Section 93 of the Maharashtra Value Added Tax Act, 2002 and the validating provision, holding that it cured the defect in the earlier incentive scheme by placing the proportionality formula in the statute. The amendment did not impose a fresh levy; it gave statutory effect to the pre-existing legislative intent that incentives apply only to turnover attributable to expansion or additional investment. A competent legislature may retrospectively amend and validate fiscal law by removing the basis of prior invalidity, and the challenges based on Articles 14 and 19(1)(g), vested rights, promissory estoppel, and inability to pass on tax failed.

---

---

Issues: Whether the retrospective amendment to Section 93 of the Maharashtra Value Added Tax Act, 2002 by the Maharashtra Value Added Tax (Levy, Amendment and Validation) Act, 2009, together with the validating provision, was constitutionally valid and amounted to a permissible validating enactment rather than the imposition of a fresh levy.

Analysis: The statutory scheme, from Section 41BB of the Bombay Sales Tax Act, 1959 to Sections 91, 93 and 93A of the Maharashtra Value Added Tax Act, 2002, consistently reflected a legislative intent to confine incentive benefits to a proportion of the turnover relatable to expansion or additional investment. The defect identified in earlier litigation was not absence of such intent, but the manner of implementation through an administrative circular instead of the prescribed rule-making route. The 2009 amendment corrected that defect by incorporating the proportionality formula into the statute and validating past actions on that basis. A legislature may enact retrospective law and may validate prior action if it removes the basis of the earlier invalidity and remains within constitutional competence. The amendment did not create a new levy; it gave statutory effect to the pre-existing proportional incentive scheme and cured the procedural infirmity that had invalidated the administrative method previously adopted. The inability to pass on tax, the existence of alleged vested rights, and the plea of promissory estoppel did not defeat legislative power in this fiscal context.

Conclusion: The retrospective amendment and validating provision were held to be valid; the challenge based on Articles 14 and 19(1)(g) failed, and the contention that the amendment imposed a fresh levy was rejected.

Final Conclusion: The statutory restriction of incentives on a proportionate basis was upheld, and the assessees did not succeed in invalidating the retrospective fiscal amendment.

Ratio Decidendi: A legislature competent to legislate on a subject may retrospectively amend and validate a fiscal enactment by removing the very basis of the earlier invalidity, provided the amendment does not merely overrule the judgment by declaration but fundamentally changes the legal foundation on which that judgment rested.

---