Retrospective tax credit amendment extends input tax credit to earlier assessment periods after curing a statutory anomaly.

An amendment substituting Section 19(2)(v) of the Tamil Nadu Value Added Tax Act, 2006 was treated as a legislative correction of an anomaly, not a new policy choice. The court reasoned that extending input tax credit to transactions covered by Section 8(2) of the Central Sales Tax Act could not rationally be confined only to the date of substitution, because that would create unequal treatment between pre-amendment and post-amendment transactions of the same class and defeat the object of the change. The substitution was therefore intended to cure the defect and operate from the inception of the Act, making the credit available for earlier assessment periods.

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Issues: Whether the amendment substituting Section 19(2)(v) of the Tamil Nadu Value Added Tax Act, 2006, extending input tax credit to transactions covered by Section 8(2) of the Central Sales Tax Act, operates retrospectively and applies to earlier assessment periods.

Analysis: The amended provision was treated as a legislative correction of an anomaly rather than the introduction of a new policy. The reasoning proceeded on the basis that there was no rational ground to confine the benefit only from the date of substitution when the amendment broadened the availability of input tax credit to transactions that had earlier been excluded. A prospective reading would create discrimination between pre-amendment and post-amendment transactions of the same kind and would defeat the object of the substitution. The adopted view was that the amendment was intended to set right the defect and therefore had to operate from the inception of the Act.

Conclusion: The amendment was held to be retrospective, and the assessee was entitled to the benefit of input tax credit for the prior period.

Ratio Decidendi: Where an amendment substitutes a provision merely to remove an anomaly and extend a beneficial tax credit that was earlier denied on no rational basis, the substitution is to be given retrospective effect unless the statute clearly indicates otherwise.

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