The Reasoning Behind Retrospective Laws

2263 Words Oct 15th, 2014 10 Pages
What is the reasoning behind retrospective laws? Why have they been introduced? At the outset, they seem quite unfair since a company would have designed a particular business strategy keeping the tax structure in mind. The issue that follows is, whether there is some deeper economic or political meaning behind the retrospective laws or not.
Every Statute which takes away or impairs rights acquired under existing laws, or creates a new obligation or imposes a new duty, or attaches a new disability in respect of transactions already passed , must be presumed to be intended not to have a retrospective effect.(1) In the words of Lord Blanesburg, “provisions which touch a right in existence at the passing of the statute are not to be applied retrospectively in the absence of express enactment or necessary intendment.”(2) Yet, there had been many Tax Amendments in the Finance Act from time to time with retrospective effect, some of which had coming into effect from as far as 1976. Though, for the better part, they were designed to deal with some court verdict which upset the existing law or the existing understanding of law.
There is no fixed formula for the expression of legislative intent to give retrospectivity to a taxation enactment. Though the legislature has enormous powers to make retrospective taxing laws yet when the act is entirely arbitrary and irrational, it may be declared invalid as offending Article 14 of the Constitution.(3) It is universally acknowledged that…
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