LexCOMMISSIONER OF INCOME TAX (CENTRAL)-1, NEW DELHI versus VATIKA TOWNSHIP PRIVATE LIMITED
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[2014] 12 S.C.R. 1037 COMMISSIONER OF INCOME TAX (CENTRAL)-1, NEW DELHI v. VATIKA TOWNSHIP PRIVATE LIMITED (Civil Appeal No. 8750 of 2014) SEPTEMBER 15, 2014 [R.M. LODHA, CJI, JAGDISH SINGH KHEHAR, J. CHELAMESWAR, A.K. SIKRI AND R.F. NARIMAN, JJ.] A B Income Tax Act, 1961 - s. 113 proviso (insertion by the C Finance Act, 2002) - Surcharge Qn block assessment - Block assessment for the period from 01.04.1989 to 10.02.2000 :- Levy of surcharge under the proviso inserted in s. 113 by the Finance Act, 2002, with effect from 01.06.2002 - Prospective or retrospective in operation ..,.. Held: Is to be construed D prospective in nature - The intention of the legislature was to make proviso in s. 113 prospective in nature - This proviso cannot be treated as declaratory/statutory or curative in nature. Answering the referred question, the Court E HELD: 1 The intention of the legislature was to make proviso in Section 113 of the Income -Tax Act, 1961 prospective in nature. This proviso cannot be treated as ·declaratory/statutory or curative in nature. [Para 38) (1069- F C, DJ 2.1. A legislation be it a statutory Act or a statutory Rule or a statutory Notification, differs in its provenance, lay-out and features as also in the implication as to its G meaning that arise by presumptions as to the intent of the maker thereof. As to the interpretation of the legislation, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to 1037 H 1038 SUPREME COURT REPORTS [2014) 12 S.C.R. A have a retrospective operation. The idea behind the rule is that a current law should govern current activities. The basis of the principle against retrospectivity is the principle of 'fairness', which must be the basis of every legal rule. Thus, legislations which modified accrued B rights or which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect; unless the legislation is for purpose of supplying an obvious c omission in a former legislation or to explain a former legislation.[Paras 30,31 and 32) [106~-F, HJ 2.2. Retrospectively is attached to benefit the persons in contradistinction to the provision imposing some burden or liability where the presumption attaches D towards prospectivity. In the instant case, the proviso added to Section 113 of the Act is not beneficial to the assessee. On the contrary, it is a provision which is onerous to the assessee. Therefore, in a case like this, the normal rule of presumption is against retrospective E operation. Thus, 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, or arises by necessary and distinct i.mplication. [Para F 34) [1065-F-G; 1066-A, B] Government of India & Ors. v. Indian Tobacco Association 2005 (2) Suppl. SCR 859 :(2005) 7 SCC 396; Vijay v. State of Maharashtra & Ors. (2006) 6 SCC 286; G Controller of Estate Duty Gujarat-Iv. M.A. Merchant 1989 ( 2 ) SCR 987 :1989 Supp (1) SCC 499; Govinddas v. Income-tax Officer 1976 (3) SCR 44 : (1976) 1 SCC 906; C.I. T., Bombay v. Scindia Steam Navigation Co. Ltd. 1962 (1) SCR 788 - referred to. H Phillips v Eyre (1870) LR 6 QB 1; L'Office Cherifien des COMMNR. OF INCOME TAX (CENTRAL)-!, NEW DELHI v. 1039 VATIKA TOWNSHIP PVT. LTD. Phosphates v. Yamashita-Shinnihon Steamship Co. Ltd. A (1994) 1 AC 486 - referred to. Principles of Statutory Interpretation by Justice G.P. Singh, LexisNexis Butterworths Wadhwa, Nagpur 13th Edn 2012 - referred to. 3.1. The rate at which the tax is to be imposed is an essential component of tax and where the rate is not stipulated or it cannot be applied with precision, it would B be difficult to tax a person. In absence of certainty about the rate because of uncertainty about the date with C reference to which the rate is to be applied, it cannot be said that surcharge as per the existing provision was leviable on block assessment qua undisclosed' income. Therefore, it cannot be said that the proviso added to Section 113 defining the said date was only clarificatory D in nature. From the table showing the different rates of surcharge in different years, it would be clear that choice · of
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