Retrospective amendments are amendments which have backwards operation i.e., they come into apply from the previous date. In India the finance minister has recognized the power to legislate retrospective laws and amendments. But the question as to the constitutional legitimacy of such amendments is debatable; though it is held valid in certain situations but majorly it is held to be inconsistent. Thus, as a check on such amendments their use is restricted only to exceptional cases. Vodafone was considered to be one such exceptional case where the amendments introduced in Finance act 2012 were given effect from the past date. It was a revolutionary but a clever move made by the GOI to tax the Vodafone company but, the move faced severe criticism from the global investors. The arbitration also held it to be violative of the India-Netherlands BIT. Many experts opined their view on the retrospective amendments being a crusher of India’s image in the minds of the overseas investors and citizens. They criticized the instability shown by the government. They stated that the prosperity of the country depends upon the economic and political institutions of the country, on their stability and transparency. Hence, though the government is granted the power to legislate laws and amendments with retrospective effect, its scope is restricted to exceptional cases and, therefore before making any retro operative law consideration of its necessity, applicability and effects is vital.

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Keywords: Vodafone, Retrospective Tax, Government, Arbitration.