Retrospective operation of judicial decisions bars prospective set-off claim for High Speed Diesel purchases under VAT law.
A judicial pronouncement declaring the correct legal position ordinarily operates retrospectively because it states what the law has always been, and prospective overruling is confined to exceptional cases. On that principle, the bar on set-off for High Speed Diesel purchases could not be limited to a later date under the VAT framework, and the amendment was read consistently with the subsequent authoritative clarification. The assessee therefore could not claim set-off only up to the date of the later decision, and the challenge to rejection of the claim failed.
Issues: Whether the assessee could claim set-off on High Speed Diesel purchases only up to the date of the High Court's later decision, on the basis that the earlier legal position should operate prospectively.
Analysis: The controversy turned on whether a judicial pronouncement declaring the correct legal position can be confined to future transactions. The Court applied the settled principle that judicial decisions ordinarily operate retrospectively because judges declare the law as it always was, and a later decision merely clarifies the correct legal position. Prospective overruling is an exception, not the rule, and no basis existed for the Commissioner to give prospective effect to the bar on set-off under the relevant VAT framework. The amendment to the rules was also understood in the light of the later authoritative clarification that set-off on HSD purchases was not available.
Conclusion: The claim for set-off could not be restricted to a prospective date, and the assessee was not entitled to the relief sought.
Final Conclusion: The challenge to the rejection of the set-off claim failed, and the dismissal of the appeal stood confirmed.
Ratio Decidendi: A judicial decision declaring the correct law ordinarily applies retrospectively, and prospective effect can be granted only in exceptional cases expressly warranting prospective overruling.
TaxTMI 
AI Drafter ✕
TaxTMI 
