Updated: Sep 11
Authored by : Rimi Baidya*
Citation: AIR 2012 SC 733/2012, S.L.P 26529/2010
Bench: Hon’ble Chief Justice S.H. Kapadia, Hon’ble Justice K.S. Radhakrishnan Hon’ble Justice Swatanter Kumar.
Vodafone International Holdings B.V. … Appellant(s) Versus Union of India & Anr. … Respondent(s)
Jurisdiction: Supreme Court of India, Civil Appellate Jurisdiction
Finance Bill of 2021 Section 195 of the Income Tax Act of 1961 Section 163 of the Income Tax Act of 1961 Section 2(14) of the Income Tax Act. 1961 Section 9(1)(i) of the Income Tax Act. 1961 Section 9(1) of the Income Tax Act. 1961 Introduction: Tax acts as a vital component for the development of a country. Thus, taxes are imposed not only on individuals but also on companies. So, it is best for the country’s government to come up with policies and laws that allow them to carry forward with the tax collection system in a smooth manner. Citizens and administrative officials need to be well-versed in the tax collection procedure to prevent any fraud. In the Indian constitution, the government has been given the power to the government to collect tax not only prospectively but also retrospectively. However, no government has the right to extract tax by making the taxpayers suffer despite their right to extract tax.
The term retrospective refers to looking back and bringing up the closed and finished transactions from the past. Retrospective transaction means the charge imposed by the state on transactions or state of dealings that took place in the past. In spite of having the legal authority to suggest retroactive taxing, the government will fall short when it comes to certainty and continuity tests.
One such incident that took place while imposing retrospective taxation was seen in 2012 when the state used its power given to them by the Constitution itself. They made this amendment with the intention to change the capital gains tax and to avoid the Supreme Court’s ruling on Vodafone International Holdings BV v. Union of India (2012). This order was passed with the intent to tax some of the businesses, especially Vodafone and Cairn Energy retroactively for their capital gain.
Thus, widespread criticism was held against the government of India. Lately, after the government’s defeat at various international forums, said that the application of retrospective transactions is being canceled and will only have a prospective impact after the Finance Bill of 2021.
Publication date and year: September, 2023
D.O.I Link: https://doi.org/10.59126/v2i4a7
Preferred Citation: Rimi Baidya, Vodafone International Holdings BV vs. Union of India and Anr., Vol. II-IV, pg 57-61 (2023).