Punjab VAT Amendment Upheld; Appeals Dismissed but Principal Tax Limited to Punjab and Chandigarh Assessments

A bench of Justices B. V. Nagarathna and Satish Chandra Sharma heard challenges to amendments to Section 29 of the Punjab Value Added Tax Act, 2005, raising the question whether the 2013 amendment extending the period of assessment and validating certain past extension orders was constitutionally valid.

The Court upheld the High Court’s decision in Amrit Banaspati and dismissed the civil appeals, holding that the State legislature was entitled to amend Section 29 to extend the assessment period and to clarify the effect of past orders extending limitation. The Court noted that the amendment sought to "obviate the consequences of the proviso to the unamended section" and relied on precedent to the effect that a legislature could make such amendments applicable even where the original limitation period had expired. The Court, in its reasoning, observed: “the legislature giving its own meaning or interpretation to a provision through a legislative fiat does not encroach upon the Courts’ domain to interpret the laws enacted by it. That the legislature could have done so originally or subsequently by an amendment which could be both prospective and retrospective. It held that sub-section (10A) to Section 29 of the PVAT Act must be read along with the rest of the Section and if read so, it would be clear that the defect in the actions i.e. the manner in which the proviso to the unamended Section 29(4) was implemented is removed.” The Court further quoted the Statement of Objects and Reasons noting the legislature’s intent "to safeguard the Revenue on account of cases becoming time barred and to undo the effect of the proviso to the unamended section 29(4)."

Background: The appeals arose from multiple writ petitions and connected appeals against amendments introduced by the Punjab Value Added Tax (Second Amendment) Act, 2013 which altered Section 29(4) of the PVAT Act by increasing the basic assessment window from three years to six years, inserting Explanations clarifying application of the six-year period, and adding Section 29(10A) to validate orders passed by the Commissioner prior to the amendment notwithstanding defects in prior service of notice. Assessees challenged the amendments as retrospective, violative of natural justice and Articles 14 and 19 of the Constitution, and as overturning settled High Court precedents including the effect of prior judgments quashing extension orders for want of prior notice.

The Punjab and Haryana High Court in Amrit Banaspati had sustained the amendment, finding it not arbitrary or excessive and observing that the proviso and explanations indicated a legislative intent to clarify and validate prior actions. The appellants placed reliance on judgments of various High Courts, while the State relied on this Court’s precedents, including Additional Commissioner (Legal) & Another v. Jyoti Traders & Another and State of Punjab v. Nokia India Pvt. Ltd. The Supreme Court agreed with the High Court’s reasoning, held that the amendment fell within legislative competence and did not warrant interference, and applied the principle that amendments increasing limitation periods could apply to assessment years whose original limitation had expired.

The Court dismissed the appeals but carved out limited relief and procedural directions. It reserved liberty to assessees to file appellate remedies within three months and directed that, where such appeals were filed, the State would not raise the question of limitation. In matters arising from the State of Punjab and the Union Territory of Chandigarh, the Court directed appellants to pay only the principal tax dues — excluding interest and penalty — by 30.06.2025; the Court observed that its earlier decision in Nokia would be restricted in its ramification to the relevant assessment years for Punjab and Chandigarh and might not bind other States. Matters originating from Andhra Pradesh were re-transferred to the Andhra Pradesh High Court for fresh consideration and disposal in accordance with law.

Case Details: Case No.: 2025 INSC 719 (Civil Appeal No.4033 of 2025 and connected matters) Case Title: M/s. Naresh Kumar Gupta v. State of Punjab & Another Appearances: For the Petitioner(s): Sri Datar (Senior Counsel for appellants) and other counsel (as per record) For the Respondent(s): Additional Advocate General, State of Punjab; ASG/learned counsel for Union Territory of Chandigarh and other State representatives (as per record)