Table of Contents
Operation of statutes
The ‘operation’ of a law means how it starts, applies to situations, and impacts rights and responsibilities. It is linked to how laws are interpreted, as courts need to figure out how the law works in real life.
Two types
1.Prospective operation of statutes
2.Retrospective operation of statutes
1. Prospective operation of statutes
The term “prospective” means looking forward. means they only affect events that happen after they are created, not those that occurred before. This is a key assumption in understanding laws.
Every statutes is prima facie prospective if it is not expressly or by necessary implication made retrospectly
illustration:
If a new law raises the punishment for a crime, a person who committed that crime before the law was enacted cannot be punished under the new, tougher penalty unless the law specifically says it applies to past actions.
Article 20(1) of the Indian Constitution prohibit ex post facto criminal laws
Exceptions to Prospective Operation
1.Express Retrospective Operation
A law can be applied to the past if the lawmakers clearly state that intention in the law’s wording.
Example: This law will be effective for all cases starting from January 1, 2024.
in the case of K.S. Paripoornan v. State of Kerala (1995), The case concerned land acquisition proceedings under the Land Acquisition Act, 1894.A Kerala state amendment had been made to the Act. those where acquisition had occurred before the amendment, but compensation or legal proceedings were still ongoing. The Supreme Court allowed the retrospective application of the amendment to pending proceedings.
2. Procedural or Evidentiary Laws
Procedural law changes or evidence rules can apply to past cases, even if not stated clearly, as long as they don’t harm established rights.Because procedural laws are seen as governing the court process, not the right or wrong of past acts.
In the case of Hitendra Vishnu Thakur v. State of Maharashtra, AIR 1994 SC 2623 The case involved the interpretation of provisions under the Terrorist and Disruptive Activities (Prevention) Act (TADA).A main question was whether changes to the procedures of the Act could be used for ongoing investigations or trials.A statute dealing with procedure is presumed to be retrospective unless it affects vested rights.
3. Beneficial or Welfare Legislation
Laws made for the benefit of specific groups (like workers, consumers, or minorities) can be applied to the past as long as they don’t impact established rights and support justice or fairness.
Example: A new pension law that boosts benefits for retirees might also apply to those who retired before it was enacted.
In the case of T.K. Lakshmana v. State of Karnataka (1992), a housing program for slum residents was made to apply to people who had been evicted before.
4. Taxation Laws
Tax laws can sometimes be applied to the past, especially to close loopholes that let people or businesses avoid taxes, stop strategies that take advantage of unclear laws, or clarify what the law meant if it was misunderstood before. However, these laws are closely examined by courts to ensure fairness, as they shouldn’t unfairly change tax responsibilities on income already earned or past transactions.
Example: The 2025 amendment states that changes in Section 10 took effect on April 1, 2023. This implies that income earned from April 1, 2023, to March 31, 2024, may be taxed under the new rules effective in 2025, despite being earned before the amendment. This illustrates retrospective taxation.
In the case of Vodafone International Holdings v. Union of India (2012) In 2012, the Indian government changed the Income Tax Act to tax indirect transfers of Indian assets. This change was aimed at Vodafone, which had bought shares in a foreign company that owned Indian assets. The tax authorities claimed that Vodafone owed capital gains tax on this deal, even though it took place outside India. Parliament approved the amendment to make sure these transactions are taxed in India. This change took effect retroactively, affecting both future and past deals, including the Vodafone deal.
In 2021, the Indian government faced criticism from investors and chose to remove the retrospective tax rule. The Taxation Laws (Amendment) Act was enacted to reverse the 2012 tax amendment. This change allowed companies like Vodafone to settle their disputes and avoid paying taxes, showing the government’s response to public and legal demands.