The Advanced Authority Ruling (AAR) of Chhattisgarh ruled that the notification no. 20/2017 amended the tax rate from 18% to 12% on Composite Supply of Works Contract only applied prospectively.
The applicant engaged into a work agreement to construct, commission, installation, finish, furnish, repair, maintain, renovate, or remodel the building. According to the notification that was sent out in August 2017, the applicant paid 12% rather than 18% in tax from June to September.
The personal hearing was conducted and the authorized representative Prakash Chand Agarwal, CA and Vikash Agarwal, Advocate, appeared before the authority to put forward the contentions.
The Authority opined that one of the established rules of interpretation was that unless explicitly stated, a piece of legislation is presumed not to be intended to have a retrospective operation.
Further, the principle of ‘Lex prospicit non respicit’, which means that ‘The Law looks forward and not backward’, has been upheld in many judicial pronouncements.
Normally, an enactment is prospective in nature. It does not affect that which has Gone or completed and closed up already.
Ordinarily, the presumption with respect to an enactment is that. unless there is something in it to show that it means otherwise, it deals with future contingencies, and does not annul or affect existing rights and liabilities or vested rights, or obligations already acquired under some provisions of law although its effect is that it does not affect an existing right as well.
If an enactment expressly provides that it should be deemed to have come into effect form a past date, it is retrospective in nature. If an enactment is intended to be retrospective in operation, and also in effect, the legislature expresses it in clear and unequivocal language in the enactment itself.
The bench observed that the applicant wrongly interpreted the tax liability at 12% and July as the effective date of the notification issued in August. Even though the tax was 18%, it is applicable till August, 2017. Thus, the notification does not have retrospective effect, it only applies to future payments.
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