Rewriting legal history

India has a predilection for passing retroactive legislation, particularly relating to tax. Sanjeev Kapoor shares his insights on the business risks and compliance issues arising from laws that go back in time

The Supreme Court of India defines a statute as retrospective if it operates on cases or facts that have come into existence before its commencement. It is a law that retroactively changes the legal consequences of acts committed or the legal status of facts and relationships that existed prior to its enactment.

As a juridical concept, retrospective legislation is against the legal maxim that nova constitutio futuris formam imponere debet non praeteritis (a new law ought to regulate what is to follow, not the past). This maxim is incorporated to a limited extent in Article 20(1) of the Constitution of India, which restricts the enactment of criminal legislation with retrospective effect, so as to avoid prejudicially affecting the rights of the accused.

In the civil law arena, the retrospective operation of the law is also considered undesirable, being contrary to the rule of law and natural justice and also promoting uncertainty and speculation. Despite these objections, the Constitution of India gives the legislature ample freedom to legislate retrospectively on civil subjects. Such legislation must, however, meet a series of conditions set out in Article 13 of the constitution and abide by judicially recognized restrictions.