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I-T Act amend can’t be retrospective: HC

Amendment sought to withdraw incentives granted to exporters.

Written by Agencies | Ahmedabad | Published: July 3, 2012 6:56:57 pm

In a breather for exporters,Gujarat High Court has held that amendment to Section 80-HHC of Income Tax Act,1961 cannot have retrospective effect.

The amendment made by Taxation Law (Amendment) Act,2005 to section 80-HHC,sought to withdraw incentives granted to exporters,but was implemented retrospectively from April

1,1998.

A division bench of acting Chief Justice Bhaskar Bhattarcharya and Justice J B Padriwala while pronouncing the judgement yesterday held that the amendment was valid,but it cannot be implemented from retrospective effect.

The HC gave the judgement while hearing a bunch of petitions (around 70) transferred to Gujarat High Court by Supreme Court in February this year,where petitioners,mainly exporters,challenged the implementation of amendments from retrospective effect to Section 80-HHC of I-T Act.

“The amendment is valid,but it cannot be implemented from retrospective effect. The court has held while pronouncing the judgement,” a lawyer appearing for the petitioners said.

The court observed that amendment made by Taxation Law (Amendment) Act,2005,cannot be applicable with retrospective effect i.e from 1998-99 as it was unconstitutional. It,however,stated that the amendment could be applicable prospectively if needed,he said.

Following the amendment in 2005,many exporters,led by the Indian Exporters Grievances Forum,had moved various High Courts in the country challenging the amendment.

As the highest number of cases were in Gujarat High Court,the Supreme Court had transfered the cases here.

The exporters,who had availed the benefit of deductions between 1983 and 2005,had challenged the retrospective taking away the benefit for entire period.

They contended that amendment discriminates between the assesses falling in the same class and it was prohibited under constitution.

Before the amendment,the clause inserted vide Finance Act,1982,to encourage exports,granted deductions up to 90 per cent of the profit relating to the drawback earned.

The amendment of 2005 provided that profits on sale of Duty Entitlement Pass Book Scheme (DEPB) credits or Duty Free Replenishment Certificate (DFRC) will be treated at par with duty drawback for the purposes of proportionate increase of profits derived from exports,computed under various clauses

of sub-section(3) of section 80-HHC.

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