Every law is generally considered to apply to future situations unless it is clearly stated that it applies to past events, according to the Supreme Court.
The Supreme Court emphasized that all laws are generally considered to be prospective unless they are specifically stated to apply retroactively. This ruling came during the review of several Civil Appeals from Maharashtra State against a High Court decision that approved a Writ Petition. The two-Judge Bench, consisting of Justice P.S. Narasimha and Justice Pankaj Mithal, explained that it is a fundamental rule that laws are typically prospective unless there are clear indications from the legislature that they should apply to past situations. If a person has gained a substantive right, it cannot be revoked without proper notice or a chance to be heard.
Solicitor General Tushar Mehta represented the Appellants, while Senior Advocate V. Sridharan represented the Respondents. The Respondent, a public limited company, sought the High Court’s extraordinary writ jurisdiction to contest three trade circulars from the Commissioner of Sales Tax in Mumbai and various notices from the Deputy Commissioner of Sales Tax under Section 38 of the Bombay Sales Tax Act, 1959 (BST Act). These notices aimed to revise the Respondent’s assessments for the Assessment Years (AY) 2002-2003 to 2004-2005. The Respondent opposed the ruling that required it to pay or refund the exempted tax portion according to the Package Scheme of Incentives 1993 (PSI) for inter-State trade or commerce.
The Division Bench approved the Writ Petition, stating that even after the 2002 amendment to Section 8(5) of the Central Sales Tax Act (CST Act), State Governments can provide full or partial tax exemptions on inter-State sales under Sections 8(1) and 8(2) for public interest, as long as they meet the conditions of Section 8(4). As a result, the challenged trade circulars and notices were annulled because the State wrongly claimed it had no authority to grant such exemptions after the amendment. This decision was appealed to the Supreme Court.
The Supreme Court noted that according to clause (c) of Section 6, unless stated otherwise, the repeal does not impact any rights or liabilities established under the previous law. The Court explained that the amendment’s impact is similar to that of a repeal. It stated that individuals retain protections that were in place before the amendment for the duration those rights were valid under the old law. Therefore, after the amendment to Section 8(5), the Government could not issue a unilateral order that would affect the rights of the assessee-respondent regarding their claim for full tax exemption. The assessee-respondent did not receive any notice canceling their Eligibility or Entitlement Certificate.
The Court stated that the rights granted to the assessee remain intact without revoking the certificates, and the changes made to Section 8(5) do not affect these rights. The amended law does not mention removing the rights given to the assessee. The Court noted that the State Government was wrong to take away these rights based on the new amendment to Section 8(5) without revoking the Entitlement Certificate from March 24, 1998, and without giving notice or a chance to be heard. As a result, the Court determined that the State Government could not issue the disputed notices to change the assessee’s assessment or demand the exempted tax just because the assessee did not provide Form ‘C’ and ‘D’ for inter-State sales. Therefore, the Apex Court dismissed the Appeals.
Cause Title: The State of Maharashtra & Ors. v. Prism Cement Limited & Anr. (Neutral Citation: 2025 INSC 199)
Appearance:
Appellants: Solicitor General Tushar Mehta, AORs Aaditya Aniruddha Pande, Anil Katiyar, and Deepanwita Priyanka.
Respondents: Senior Advocate V Sridharan, AORs Punit Dutt Tyagi, Zoheb Hossain, Charanya Lakshmikumaran, S. Ravi Shankar, K. Paari Vendhan, Anushree Prashit Kapadia, M. P. Devanath, Advocates Amarjit Singh Bedi, Surekha Raman, Shreyash Kumar, Yashwant Sanjenbam, Imlikaba Jamir, Sahil Parghi, S Sriram, Neha Choudhary, Umang Motiyani, Aayush Agarwal, Falguni Gupta, Ayush Agarwal, Yamunah Nachiar, Meghna Mukherjee, Ujjwal A Rana, Himanshu Mehta, Rishabh Sancheti, Padma Priya, and Paarivendhan.
