The doctrine of prospective overruling is applied when a ...

Indian Supreme Court Uses Prospective Overruling to Alter Tax Rules, Stagger Payments, Waive Penalties for Past Demands.

August 21, 2024

Case Laws     Indian Laws     SC

The doctrine of prospective overruling is applied when a constitutional court overrules a well-established precedent by declaring a new rule but limits its application to future situations to avert injustice or hardships. The US Supreme Court has considered the existence of a statute or judicial decision as an "operative fact" having consequences that cannot be ignored, and the effect of a subsequent ruling on invalidity must be considered in light of various aspects. The Indian Supreme Court has adopted this doctrine, partly inspired by US jurisprudence. In cases like Golakh Nath v. State of Punjab and Jindal Stainless Ltd. v. State of Haryana, the Court applied the doctrine. Considering the substantial amount of tax demands and the delay in proceedings, the Court held that while states may levy or renew demands pertaining to Entries 49 and 50 of List II, the demand shall not operate on transactions prior to April 1, 2005. The payment of tax demand shall be staggered over twelve years from April 1, 2026, and the levy of interest and penalty on demands before July 25, 2024, shall stand waived.

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