Supreme Court rules that benami law cannot be applied retrospectively
The Supreme Court (SC) on Tuesday ruled that the Benami law can only be applied prospectively and not retrospectively, and held section 3(2) of the Act “unconstitutional”.
Several businesses have been awaiting this verdict on the Benami Transactions (Prohibition) Amendment Act, which came into effect on November 1, 2016.
The apex court held that there is only prospective effect of the 2016 Act and, thus, all the actions taken before the amendment are set aside.
Section 3 of the Act, which the court held “unconstitutional”, says any person who enters into any benami transaction shall be punishable with imprisonment for a term which may extend to three years or with fine or with both.
The Bench, led by Chief Justice of India NV Ramana, delivered the judgment following a plea preferred by the Centre against a Calcutta High Court order holding that the 2016 Amendment Act was prospective in nature. The copy of the judgment is awaited.
The new Act expanded the definition of the transactions classified as benami and imposed stiff penalties that put many firms and individuals under the scanner as it had been used retrospectively.
The tax department had issued thousands of notices for cash transfers, property deals for earlier periods under the law.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.