Prospective operation of charging provision: amendment not applicable to provisional assessments finalized before enactment, therefore no interest.

The note addresses whether the amendment adding subsection (3) to Section 18 of the Customs Act, 1962, which levies interest on amounts due after final assessment, applies to provisional assessments completed before the amendment's commencement. Applying principles of statutory construction, the amendment is characterised as a substantive charging provision creating a new liability and is therefore prima facie prospective. In the absence of express retrospective language or unavoidable implication, the provision does not apply to provisional assessments made before its insertion; consequently no interest is leviable on such prior provisional assessments.

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Issues: (i) Whether interest under the provision inserted as sub-section (3) to Section 18 of the Customs Act, 1962 is payable upon finalization of provisional assessments that were made prior to insertion of that sub-section (i.e. prior to 13.07.2006).

Analysis: The issue requires interpretation of the amendment inserting sub-section (3) to Section 18 of the Customs Act, 1962 (introduced w.e.f. 13.07.2006 by Section 21 of the Taxation Laws (Amendment) Act, 2006) which prescribes liability to pay interest on amounts payable consequent to final assessment. Established principles of statutory construction mandate that a statute is prima facie prospective unless express words or necessary implication indicate retrospective operation. Judicial authorities have characterised the insertion of sub-section (3) to Section 18 as a substantive amendment creating a new liability to levy interest on differential duty; analogous rulings and administrative instructions on similar provisions have treated such charging provisions as prospective. Absent express retrospective language or unavoidable implication, the charging provision cannot be applied to provisional assessments completed before its insertion.

Conclusion: Sub-section (3) of Section 18 of the Customs Act, 1962 does not apply to provisional assessments made prior to 13.07.2006; consequently, no interest is leviable on the finalization of provisional assessments made before that date. The appeal is allowed in favour of the assessee.

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