Prospective operation of delegated legislation and mandatory adjustment of State-collected sums limit contractor liability to the balance due.

Amended delegated legislation is presumed prospective unless clear retrospective intent is shown, so Rule 13 of the Abkari Shops Departmental Management Rules, 1972 could not be used to deny credit under a pre-amendment contract. Amounts collected by the State during departmental management had to be adjusted against the contractor's liability; the demand could not be raised on a gross basis while ignoring receipts already realised. Liability was therefore confined to the balance payable after credit, with consequential relief flowing on the outstanding amount and attached property.

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Issues: (i) Whether the amended Rule 13 of the Abkari Shops Departmental Management Rules, 1972 applied retrospectively to contracts executed before its amendment so as to deny credit of departmental management fee collected during departmental management; (ii) whether the State could recover the full demand without adjusting the amounts already realised by it during departmental management, and what consequential relief followed.

Issue (i): Whether the amended Rule 13 of the Abkari Shops Departmental Management Rules, 1972 applied retrospectively to contracts executed before its amendment so as to deny credit of departmental management fee collected during departmental management.

Analysis: The contract was entered into before the amendment came into force. The governing principle is that a rule or delegated legislation is presumed to operate prospectively unless a clear intention to the contrary is expressed. In the absence of express retrospective authorization, subordinate legislation cannot alter past transactions or take away accrued rights. The earlier departmental management fee collected while the vend was under direct State management therefore could not be treated as non-adjustable merely because of the later amendment.

Conclusion: The amended Rule 13 did not apply retrospectively to the pre-amendment contract, and the assessee was entitled to credit for departmental management fee collected during the relevant period.

Issue (ii): Whether the State could recover the full demand without adjusting the amounts already realised by it during departmental management, and what consequential relief followed.

Analysis: Once the State itself had taken over and collected departmental management fee and excise duty during the relevant period, those receipts had to be given due credit while computing the liability. The demand could not be inflated by ignoring amounts already recovered by the State. The earlier view taking the same approach was correctly applied. In the circumstances, the liability was limited to the balance after adjustment, and the consequential directions regarding discharge of liability and release of attached property followed from that conclusion.

Conclusion: The State could not recover the same amounts again without adjustment, and the consequential liability stood confined to the balance payable after credit.

Final Conclusion: The dismissal of the State's appeal left intact the High Court's approach on non-retrospective application of the amended rule and the assessee's entitlement to adjustment of amounts already collected by the State, with consequential relief on the outstanding balance and attached property.

Ratio Decidendi: Delegated legislation is presumed to operate prospectively unless retrospective operation is clearly authorised, and amounts realised by the State during departmental management must be credited against the contractor's liability when computing the balance due.

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