Retrospective tax amendment cannot create criminal liability for past conduct; excise prosecution quashed.

Retrospective insertion of Section 38A of the Finance Act, 2001 could not sustain criminal prosecution for alleged Central Excise offences where the acts were said to have occurred before the provision came into force. A retrospective amendment cannot create criminal liability for conduct that was not an offence when done, and prosecution cannot proceed in the absence of an existing penal provision on the date of the alleged acts. The proceedings were therefore held unsustainable and quashed.

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Issues: Whether criminal proceedings for alleged offences under the Central Excise law could be sustained on the basis of a retrospective insertion of Section 38A of the Finance Act, 2001 when the provision was not in force on the date of the alleged acts.

Analysis: The proceedings were founded on the retrospective insertion of Section 38A of the Finance Act, 2001. The relevant acts were said to have occurred before that provision came into force. A retrospective amendment cannot create criminal liability for conduct that was not prohibited when done, and prosecution cannot lie where no offence existed on the date of the alleged acts.

Conclusion: The prosecution was held unsustainable and the proceedings were quashed.

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