SUPREME COURT OF INDIA M/S AVANI EXPORTS & CIT - 5 & ANR. v. ANR. March 30, 2015 ORDER Amendment to Section 80HHC(3) of Income Tax Act, 1961 (in short `the Act') was made by Taxation Laws (Second Amendment) Act, 2005 with retrospective effect i.e. with effect from Ist April, 1992. By this amendment certain benefits were in fact extended to exporters who are entitled to claim according to Sec.80HHC of Act. However at same time, amendment also carved out two categories of exporters, namely, those whose export is less thanRs. 10 crores per year and those exporters whose exports turn over is more than Rs.10 crores per annum. Insofar as entitlement of these benefits to exporter having turn over of more than Rs.10 crores p.a. is concerned, two conditions contained in third and fourth proviso to said amendment were to be satisfied for claiming benefits. Those were: (a) he had option to choose either duty drawback or Duty Entitlement Pass Book Scheme, being Duty Remission Scheme; and (b) rate of drawback credit attributable to customs duty was higher than rate of credit allowable under Duty Entitlement Pass Book Scheme, being Duty Remission Scheme. All respondents in these SLPs, who are exporters, belong to second category. They filed writ petitions challenging conditions mentioned in third and fourth proviso to Section 80 HHC(3). In fact it was their precise contention that these conditions are severable and therefore these two conditions should be declared ultra vires and severed. rationale behind seeking such prayer was obvious inasmuch as writ petitioners did not want entire Notification to be declared ultra vires which was to their advantage. What they wanted was that benefit of amended provision be accorded, without insisting on aforesaid conditions. High Court vide impugned judgment has decided issue in favour of writ petitioners by concluding as under: 26. On consideration of entire materials on record, we, therefore, find substance in contention of learned counsel for petitioners that impugned amendment is violative for its retrospective operation in order to overcome decision of Tribunal, and at same time, for depriving benefit earlier granted to class of assessees whose assessments were still pending although such benefit will be available to assessees whose assessments have already been concluded. In other words, in this type of substantive amendment, retrospective operation can be given only if it is for benefit of assessee but not in case where it affects even fewer section of assessees. 27. We, accordingly, quash impugned amendment only to this extent that operation of said section could be given effect from date of amendment and not in respect of earlier assessment years of assessees whose export turnover is above Rs.10 crore. In other words, retrospective amendment should not be detrimental to any of assessees. Against High Court judgment these SLPs are filed by Union of India. Mr. Mukul Rohtagi, learned Attorney General for India submits that once prayer made was to severe aforesaid two conditions as onerous and utra vires, High Court should have couched reliefs in terms of that prayer only, instead of stating that operation of Section would be given effect to prospectively only and these conditions would not operate retrospectively. At same time, he accepts that legal position would be that those exporters with turnover of rupees less thanRs. 10 crores and other like respondents with turn over of more than Rs.10 crores would be at par and both would be entitled to benefits. We find that in essence High Court has quashed severable part of third and fourth proviso to Sec.80HHC (3) and it becomes clear therefrom that challenge which was laid to conditions contained in said provisos by respondent has succeeded. However, to make position crystal clear, we substitute direction of High Court with following direction: Having seen twin conditions and since 80HHC benefit is not available after 1.4.05, we are satisfied that cases of exporters having turnover below and those above 10 cr. Should be treated similarly. This order is in substitution of judgment in Appeal. With aforesaid clarification all these SLPs including that of assessees filed against judgment of M.P.High Court are disposed of. (SUMANWADHWA) (SUMAN JAIN) AR-cum-PS COURT MASTER *** CIT - 5 & Anr. v. M/s Avani Exports & Anr