Retrospective credit restriction cannot undo lawfully earned AED(GSI) credit; demand and penalty were held unsustainable.

Accumulated AED(GSI) credit earned before 1 April 2000 was held to remain utilisable and retainable despite a later retrospective amendment restricting such utilisation. The Tribunal applied its earlier decision on the same issue, as approved by the High Courts, and treated the credit as lawfully earned under the then prevailing regime. It further held that the later statutory changes could not justify reversal of a utilisation already made, so the assessee's credit position had to be restored. On that basis, the demand and penalty were held unsustainable.

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Issues: Whether accumulated AED(GSI) credit earned prior to 1 April 2000 could be utilised and retained despite the subsequent retrospective amendment restricting such utilisation.

Analysis: The Tribunal followed its earlier decision on the same issue, which had been approved by the High Courts, and held that the credit had been lawfully earned under the then prevailing regime and was validly used after the 2003 amendment. Once the later statutory changes were applied, the attempted reversal of the utilisation could not be sustained, and the credit position was required to be restored to the assessee.

Conclusion: The demand and penalty were not sustainable and the assessee was entitled to retain the credit.

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