Retrospective Effect Given to 3rd & 4th Provisos to s. 80HHC is ultra vires

Avani Exports vs. CIT (Gujarat High Court)

Retrospective Effect Given to 3rd & 4th Provisos to s. 80HHC is ultra vires

The Third & Fourth Provisos to S. 80HHC were inserted by the Taxation Laws (Second Amendment) Act, 2005 with retrospective effect from 1.4.1998 to provide that the deduction in respect of exporters having a turnover of more than Rs.10 Crore would be available only if he has evidence to prove that he had an option to choose either duty drawback or DEPB and that he chose DEPB, even when he was entitled to higher benefit under the duty drawback scheme. The assessee claimed that this was an absurd condition because no sensible person would ever exercise the option to choose a scheme under which he would get lesser benefit. The retrospectivity of the amendment was challenged on the basis that it was arbitrary and discriminatory under Articles 14 & 19 of the Constitution. HELD upholding the challenge:

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