The Punjab and Haryana high court on 07.08.2015 dismissed the petitions of more than 150 firms operating in Punjab which had challenged amendment in the VAT (value-added tax) Act, 2005 by the state government in 2013.

As per rough estimates and arguments of the state in the high court, there will be a revenue benefit of more than Rs 100 crore with this order.

The petitioners had challenged the amendment in the VAT Act carried out in November 2013.

As per the amended provisions, the limitation period for 2006-07 returns of these firms had been made seven years from three years and for 2007-08 and subsequent years, it was made six years. Earlier provisions of the Act had provision of three years for the assessment of returns of these firms. The period had already expired on the date of amendment in 2013. The amendment was necessitated by the fact that the government found that there was evasion by some firms in the state, but the limitation period had expired. The government could not have assessed the returns as per the old Act. So, it was necessary to make the period longer than the original assessment period, the government counsel, Jagmohan Bansal, told Hindustan Times. The state, while defending its move, had argued that it had the powers to amend sections of the VAT Act and it included the power to amend it retrospectively.

Though the detailed order is awaited, the high court bench of justice SJ Vazifdar and justice GS Sandhawalia dismissed the petitions of private firms on Friday.

(Author – Amit Bajaj Advocate, Bajaj & Bajaj Advocates, 128, Sangam complex, Milap chowk, Jalandhar City (Punjab), Email: [email protected] , M +919815243335)

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  1. hari babu says:

    Even though it was held in various decisions/judgements that State is empowered to amend the provisions retrospectively, it is high time that Governments (both State and Central) should stick to amendments only in prospective basis. How can dealers/assesses know the tax liability/burden in case of retrospective amendments. Retrospective amendments will hurt investor sentiment and they would not be able to invest in the Country. Governments should aim for stability in taxation.

    (K. V. Hari Babu)

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June 2021