In Brief
Industrial units challenged the constitutional validity of a 2009 Maharashtra law that retrospectively amended the Value Added Tax Act with effect from 2005. The law restricted VAT exemption benefits (under incentive schemes) to a proportionate share based on capital investment in expanded capacity, rather than the entire production of expanded units as the industrial units had understood. The Supreme Court upheld the amendment as valid. It held that the legislature has power to enact laws retrospectively; the original statutory intent to restrict benefits proportionately was clear in earlier legislation; the 2009 amendment merely cured an executive defect (improper implementation method) rather than imposing a fresh levy; and the inability of dealers to pass VAT to consumers does not affect legislative competence to levy tax.
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