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TMI Blog2024 (8) TMI 956X X X X Extracts X X X X X X X X Extracts X X X X ..... in light of various aspects. This Court has adopted the doctrine of prospective overruling, partly inspired by the jurisprudence developed in the US. In GOLAKH NATH VERSUS STATE OF PUNJAB [ 1967 (2) TMI 95 - SUPREME COURT] a Bench of eleven Judges of this Court was called upon to decide the validity of the Constitution (Seventeenth Amendment) Act 1964 which included certain state agrarian laws in the Ninth Schedule of the Constitution. The majority held that an amendment to the Constitution was law according to the definition under Article 13. Further, it was held that constitutional amendments are also subject to limitations prescribed under Article 13 (2). In JINDAL STAINLESS LTD. AND ANR. VERSUS STATE OF HARYANA AND ORS. [ 2016 (11) TMI 545 - SUPREME COURT (LB)] a Bench of nine Judges of this Court held that a non-discriminatory tax does not per se constitute a restriction on the right to free trade, commerce and intercourse guaranteed under Article 301. This Court overruled long-standing precedents that held that taxes, except for compensatory taxes, offend Article 301. The total amount, that is the principal plus the interest, due by the assesses in the pending matters may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Civil Appeal No. 4588 of 2017 With Civil Appeal No. 205 of 2017 With Civil Appeal Nos. 5728-5729 of 2018 With Civil Appeal Nos. 4722-4724 of 1999 With Civil Appeal No. 5333 of 2002 With Civil Appeal Nos. 5335-5336 of 2002 With Civil Appeal No. 5599 of 2006 With Civil Appeal No. 5649 of 2006 With Civil Appeal No. 378 of 2007 With Civil Appeal No. 665 of 2007 With Civil Appeal No. 1180 of 2007 With T.P. (Civil) No. 481 of 2007 With T.P. (Civil) No. 906 of 2007 With Civil Appeal No. 3401 of 2008 With Civil Appeal No. 3400 of 2008 With Civil Appeal No. 3402 of 2008 With Civil Appeal No. 8311 of 2011 With Civil Appeal No. 4293 of 2012 With Civil Appeal No. 2055 of 2009 With T.P. (Civil) No. 951 of 2006 With Civil Appeal No. 4991 of 2006 With Civil Appeal No. 4992 of 2006 With Special Leave Petition (Civil) No. 763 of 2007 With Special Leave Petition (Civil) No. 15900 of 2007 With Civil Appeal No. 3403 of 2008 With Civil Appeal Nos. 4710-4721 of 1999 With Civil Appeal No. 2174 of 2009 With Civil Appeal No. 6497 of 2008 With Civil Appeal No. 6498 of 2008 With Civil Appeal No. 6137 of 2008 With Civil Appeal No. 7397 of 2008 With Civil Appeal No. 96 of 2009 With Civil Appeal No. 6499 of 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Adv. Mr. Gunjesh Ranjan, Adv. Mr. Shashwat Anand, Adv. Mrs. Divya Mishra, Adv. Mr. Vaibhav Jain, Adv. Mr. Ujjwal A Rana, Adv. Mr. Himanshu Mehta, Adv. M/S. Gagrat And Co, AOR Mr. S. K. Verma, AOR Mr. Ajit Kumar Sinha, Sr. Adv. Mr. Ashwarya Sinha, AOR Mr. Aditya Malhotra, Adv. Ms. Priyanka Sinha, Adv. Mr. Sanjay Kumar Tyagi, AOR Ms. Manjeet Kirpal, AOR Dr Manish Singhvi, Sr. Adv. Mr. P. V. Yogeswaran, AOR Mr. Gaurav Juneja, Adv. Mrs. Vanita Bhargava, Adv. Mr. Sanjeev Kumar Kapoor, Adv. Ms. Monika Singh, Adv. Mr. Ajay Bhargava, Adv. Mr. Aakash Bajaj, Adv. Mr. Sanjeev K . Kapoor, Adv. Mr. Sanjeev K. Kapoor, Adv. Ms. Nandita Chauhan, Adv. Mr. Avirat Kumar, Adv. Ms. Muskan Narang, Adv. Ms. Arushi Yadav, Adv. M/S. Khaitan Co., AOR Mr. Neeraj Kumar Gupta, AOR Mr. Ranjeet Kumar Singh, Adv. Mr. Nitin Singh, Adv. Mr. Shivang Srivastava, Adv. Mr. Pitambar Acharya, Sr. Adv. Mrs. Kirti Renu Mishra, AOR Ms. Sharmila Upadhyay, AOR Mr. Pawan R Upadhyay, Adv. Mr. Sarvjit Pratap Singh, Adv. Mr. Sarad Kumar Singhania, AOR Ms. Rashmi Singhania, Adv. Mr. Yash Singhania, Adv. Mr. Ninad Laud, Adv. Mr. Zubin Dash, Adv. Mr. Dhananjya Mishra, Adv. Ms. Shally Bhasin, Adv. Mr. P. S. Sudheer, AOR Mr. Rishi Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shweta Jaishankar Dwivedi, Adv. Mr. Mayank Katyan, Adv. Mr. Milind Kumar, AOR Mr. T. Harish Kumar, AOR Mr. Shiv Mangal Sharma, A.A.G. Ms. Abhinandini Sharma, Adv. Mr. Saurabh Rajpal, Adv. Ms. Nidhi Jaswal, Adv. Ms. Shalini Singh, Adv. Mr. Deepak Verma, Adv. Mr. Abhishek Sharma, Adv. Mr. Amogh Bansal, Adv. Mr. Sandeep Kumar Jha, AOR Mr. Ajay Aggarwal, Adv. Mr. Adarsh Aggarwal, Adv. Mr. R.P. Aggarwal, Adv. Mr. Rajan Narain, AOR Mr. Sunny Choudhary, AOR Ms. Ruchira Goel, AOR Mr. Abhishek Gupta, AOR Mrs. Manik Karanjawala, AOR Ms. Nandini Gore, Adv. Ms. Sonia Nigam, Adv. Ms. Tahira Karanjawala, Adv. Mr. Akhil Abraham Roy, Adv. Mr. Rajat Dasgupta, Adv. Mr. Akarsh Sharma, Adv. Mr. Mohammad Shahyan Khan, Adv. Ms. Manvi Rastogi, Adv. Mr. Aman T Mehta, Adv. Mr. Apoorv Kurup, A.A.G. Ms. Ankita Sharma, AOR Mr. S. S. Shroff, AOR Mr. Bishwajit Dubey, A.A.G. Mr. Vinayak Sharma, Standing Counsel, Adv. Mr. Ravinder Kumar Yadav, AOR Ms. Kritika Yadav, Adv. Ms. Prerna Singh, Adv. Mr. Guntur Pramod Kumar, AOR Mr. Gautambhatia, Adv. Mr. Gautam Bhatia, Adv. Mr. Samarth Luthra, Adv. Mr. Dhruv Yadav, Adv. Mr. Keshav Singh, Adv. Mr. Gaurav Kejriwal, AOR Mr. K. Parameshwar, A.A.G. Mr. Rajeev Kumar Dubey, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Adv. Ms. Riddhi Jad, Adv. M Mr. Gopal Prasad, AOR Mr. Shibashish Misra, AOR Mr. Kumar Visalaksh, Adv. Mr. Rahul Khurana, Adv. Mr. Udit Jain, Adv. Mr. Abhishek Vikas, AOR Mr. Mahesh Agarwal, Adv. Mr. Rishi Agrawala,, Adv. Mr. Ankur Saigal, Adv. Mr. M.s. Ananth, Adv. Ms. S. Lakshmi Iyer, Adv. Ms. Neha Agarwal, Adv. Mr. Himanshu Saraswat, Adv. Mr. E. C. Agrawala, AOR M/S. Trilegal Advocates On Record, AOR Mr. Rajat Mittal, AOR Mr. Vivek Sharma, AOR Dr. Vijay Kumar Sharma, Adv. Mr. Anand Varma, AOR Ms. Apoorva Pandey, Adv. Ms. Adyasha Nanda, Adv. Mr. Mahesh Agarwal, Adv. Mr. Rishi Agrawala,, Adv. Mr. Ankur Saigal, Adv. Mr. M.s. Ananth, Adv. Ms. S. Lakshmi Iyer, Adv. Ms. Neha Agarwal, Adv. Mr. Himanshu Saraswat, Adv. Mr. E. C. Agrawala, AOR Mr. Praveen Swarup, AOR Mr. Ameet Siingh, Adv. Mr. Praveen Swarup, Adv. Ms. Pareena Swarup, Adv. Mr. Ravi Kumar, Adv. Mr. Devesh Maurya, Adv. Mr. K.p. Singh, Adv. Ms. Payal Swarup, Adv. Mr. Nityanand Mahato, Adv. Mr. Akshat Shrivastava, AOR Ms. Anuradha Dutt, Adv. Ms. Fereshte D. Sethna, Adv. Mr. Tushar Jarwal, Adv. Mr. Abhinav Gupta, Adv. Ms. Suman Yadav, Adv. Ms. Priyanka M.P., Adv. Mr. Haaris Fazili, Adv. Mr. Kunal Dutt, Adv. Mr. Yash Mittal, Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntities bidding for mineral concessions have submitted their financial bids on the basis of the legal position in India Cement (supra). If MADA (supra) is given retrospective effect, it will rewrite commercial bargains underpinning the mineral auctions. This Court ordinarily does not disturb past or concluded transactions in tax matters; d. The doctrine of prospective overruling is well-established in Indian constitutional jurisprudence. MADA (supra) should be given prospective effect because it lays down new constitutional principles; and e. Where enforcement of taxing legislation was either partially or completely interdicted by judicial orders, it should be directed that no new tax demand be made for the period before the judgment in MADA (supra), that is, before 25 July 2024. 3. On the other hand, Mr Rakesh Dwivedi, Mr Vijay Hansaria, and Mr Tapesh Kumar Singh, senior counsel, appearing for the States made the following submissions: a. The doctrine of prospective overruling is applicable only when the judgment invalidates a legislation or introduces a new interpretation by overruling its earlier decision. The doctrine of prospective overruling has never been applied to situatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verruling clear past precedent on which litigants may have relied, or by deciding an issue of first impression whose resolution was not foreshadowed; (ii) the court must weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation will further or retard the operation of the rule; and (iii) whether the application of nonretroactivity avoids substantial inequitable results, injustice or hardships. 7. This Court has adopted the doctrine of prospective overruling, partly inspired by the jurisprudence developed in the US. In Golak Nath v. State of Punjab, a Bench of eleven Judges of this Court was called upon to decide the validity of the Constitution (Seventeenth Amendment) Act 1964 which included certain state agrarian laws in the Ninth Schedule of the Constitution. The majority held that an amendment to the Constitution was law according to the definition under Article 13. Further, it was held that constitutional amendments are also subject to limitations prescribed under Article 13 (2). [Constitution of India, Article 13]. Resultantly, the constitutional amendment was declared void for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that may be brought about by the sudden withdrawal at this stage of the amendments from the Constitution, we think that considerable judicial restraint is called for. We, therefore, declare that our decision will not affect the validity of the Constitution (Seventeenth Amendment) Act, 1964, or other amendments made to the Constitution taking away or abridging the fundamental rights. We further declare that in future the Parliament will have no power to amend Part III of the Constitution so as to take away or abridge the fundamental rights. (emphasis added) 11. Although Golak Nath (supra) was subsequently overruled in Kesavananda Bharati v. State of Kerala (1973) 4 SCC 225, the doctrine of prospective overruling has been accepted by this Court. This Court has applied the doctrine in varied contexts. The following principles emerge on the application of the doctrine: a. The power of this Court to mould the relief claimed to meet the justice of the case is derived from Article 142; [Belsund Sugar Co. Ltd. v. State of Bihar, (1999) 9 SCC 620 [112]. b. It is applied by this Court while overruling its earlier decision, which was otherwise final. It has also been applied when deciding on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s had proceeded on the assumption that there was no requirement to furnish a copy of the enquiry report to the delinquent officer; and c. reopening of all disciplinary proceedings before Ramzan Khan (supra) would result in grave prejudice to the administration which outweighed the benefit to the employees. Hence, it was held that no proceedings before the decision in Ramzan Khan (supra) should be challenged on the ground that there was a failure to furnish the enquiry report. D. A pragmatic solution to reconcile the conflicting interests 13. In India Cement (supra), a Bench of seven Judges of this Court held that royalty is tax. Resultantly, it was held that the State legislatures have no legislative competence to impose cess on royalty under Entries 23 and 50 of List II. Fifteen years later, a Constitution Bench in Kesoram (supra) held that royalty is not a tax. It was further held that the power to levy tax on mineral rights vests with the State legislatures and is subject to any limitations laid down by Parliament by law relating to mineral development. Given this divergence, a reference was made to a larger Bench. MADA (supra) has laid down the principles for interpreting Entry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... less Ltd. (supra) [897]]. However, the decision was given a retrospective effect. In her concurring opinion, Justice Banumathi dealt with the issue raised by the assesses about payment/refund of tax in case the validity of the legislation was upheld or otherwise. The learned Judge rejected the claim of the assesses for refund of taxes thus: 481. It is well settled that a claim of refund can be allowed only when the claimant establishes that he has not passed on the tax burden to the consumers. No refund can be granted so as to cause windfall gain to any person when he has not suffered the burden of tax. The possibility of the tax burden having been passed on to the consumers by the assessees cannot be ruled out in the present case. Applying the law laid down above to the present case, it emerges that the assessees cannot claim refund irrespective of whether the impugned legislations are declared valid or unconstitutional. Unless the assessees establish that they have not passed on the tax burden to the consumers, they cannot make a claim for refund and unjustly enrich themselves. (emphasis added) 17. MADA (supra) has upheld the legislative competence of States under Entries 49 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on agreements concluded after the date of judgment. However, the legal context in the present batch of matters is different. Article 265 of the Constitution prescribes that no tax shall be levied or collected except by authority of law. The law must be valid in the sense that it must be within the legislative competence of the legislature and consistent with other provisions of the Constitution. [Mafatlal Industries Ltd. v. Union of India, (1997) 5 SCC 536 [25]]. Further, the power to levy tax is an incidence of sovereignty. [Jindal Stainless Ltd (supra) [17]]. If we are to give a prospective application to MADA (supra), it would result in a situation where the legislation enacted by the States in pursuance of their plenary powers under Entries 49 and 50 of List II may conceivably be invalidated based on a position of law which has been overruled. This would not be a constitutionally just outcome. 20. After India Cement (supra), Parliament enacted the Cess and Other Taxes on Minerals (Validation) Act 1992 to validate the imposition and collection of taxes on minerals made under the State legislations before 1991. The Central Government also increased the rates of royalty to compens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to their total net worth. Steel Authority of India has stated on affidavit that retrospective application of MADA (supra) will lead to revival of cumulative demands to the tune of approximately Rupees three thousand crores from different States. The delay in the court proceedings should not be to the detriment of the assesses. [See K C Ninan v. Kerala State Electricity Board, 2023 SCC OnLine SC 663 [339]]. Taking into consideration the lapse of more than three decades since India Cement (supra) and more than a decade since the matter was referred to a larger Bench, equities will be balanced if the State governments waive the outstanding interest accrued on the principal due from the assesses. This direction applies to all assesses, regardless of whether they have approached this Court or the High Courts challenging the validity of the relevant statutes. 23. During the proceedings, the Solicitor General submitted that a few States do not wish to collect the dues accrued before the decision in MADA (supra). It is the prerogative of the State legislatures to determine whether to forego the dues for the period before 25 July 2024. E. Conclusion 24. The submission that MADA (supra) sho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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