Mineral Area Development Authority vs Steel Authority of India 2024 INSC 554 – Clarification – a. While the States may levy or renew demands of tax, if any, pertaining to Entries 49 and 50 of List II of the Seventh Schedule in terms of the law laid down in the decision in MADA (supra) the demand of tax shall not operate on transactions made prior to 1 April 2005; b. The time for payment of the demand of tax shall be staggered in instalments over a period of twelve years commencing from 1 April 2026; and c. The levy of interest and penalty on demands made for the period before 25 July 2024 shall stand waived for all the assesses. (Para 25)
Doctrine of prospective overruling– 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. The underlying objective is to avert injustice or hardships- The following principles emerge on the application of the doctrine: a. The power of this Court to mould the relief claimed to meet the justice of the case is derived from Article 142; b. It is applied by this Court while overruling its earlier decision, which was otherwise final. It has also been applied when deciding on an issue for the first time; c. The object is to validate all the actions taken before the date of declaration in the larger public interest. The doctrine does not validate an invalid law, but the declaration of invalidation takes effect from a future date; d. Cases that have attained finality are saved because doing otherwise would cause unnecessary and avoidable hardships; e. It is applied to bring about a smooth transition of the operation of law without unduly affecting the rights of the people who acted upon the overruled law; f. It is a device innovated to avoid: (i) reopening settled issues, (ii) refund of amounts collected under invalid legislation, and (iii) multiplicity of proceedings; and g. It is applied to avoid social and economic disruptions and give sufficient time to the affected entities and institutions to make appropriate changes and adjustments- The doctrine of prospective overruling has been applied by this Court in situations where the new declaration results in the invalidation of legislation, which would otherwise have been valid under the old declaration. The doctrine has also been used where this Court has declared a legislation as ultra vires. In the case of taxing statutes, such a declaration would make the State liable to refund all amounts collected under the invalid legislation. Therefore, this Court declares the new rule to apply prospectively not only to secure the revenues of the State but also to protect the rights and obligations crystallized by persons and entities under the old regime. (Para 5-14)