A five-member Bench of the Supreme Court sets at rest the vexatious issue of what constitutes a retrospective amendment in the context of Income-Tax Act.

Delivering a judgment on Monday (September 15) in Commisioner of IT, New Delhi Vs Vatika Township Private Ltd and Others , the Supreme Court observed that the principle of law was lex prospicit non respicit : the law looks forward and not backward.

It noted that the obvious basis of the principle against retrospectivity is the principle of fairness. Of the various rules guiding how legislation has to be interpreted, one golden rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation.

The apex court said: “Law passed today cannot apply to events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow’s backward adjustment of it.

“Our belief in the nature of the law is founded on the bedrock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset.”

A fundamental rule

The Supreme Court observed that, generally, retrospectivity is attached to benefit the persons in contradistinction to the provision imposing some burden or liability where the presumption attaches towards prospectivity.

It said that the rule against retrospective operation is a fundamental rule of law that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in the terms of the Act, and arises necessarily by distinct implication.

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