Benami Amendment 2016 Retrospective or Not? Supreme Court to Examine Validity of Attachment Orders Issued Pre-2016 [Read Judgement]

The Supreme Court of India is set to examine whether the Benami Transactions (Prohibition) Amendment Act, 2016 applies retrospectively to transactions carried out before 25 October 2016, and whether attachment orders issued prior to that date are valid under law.

The case arises from a judgment of the Gujarat High Court for the Someshwar Darshan Cooperative Housing Society Ltd, where the court quashed attachment orders issued under Section 24(3) of the Benami Transactions (Prohibition) Amendment Act, 2016.

The Gujarat High Court’s decision, dated 7 September 2022, followed the Supreme Court’s ruling in Union of India v. Ganpati Dealcom Pvt. Ltd. (Civil Appeal No. 5783 of 2022, decided on 23 August 2022), which held that the 2016 Amendment introduced substantive provisions and could not apply retrospectively to transactions completed before 25 October 2016.

Before the High Court, the petitioners argued that the alleged benami transactions had occurred before the 2016 Amendment came into effect. They argued that the attachment and confiscation proceedings initiated under the amended Act were invalid because the amendment was substantive and punitive, not procedural.

Understanding Common Mode of Tax Evasion with Practical Scenarios, Click Here

The Division Bench of Chief Justice Aravind Kumar and Justice Ashutosh J. Shastri observed that the issue had already been decided by the Supreme Court in Ganpati Dealcom Pvt. Ltd., where it was held that the 2016 Amendment was not merely procedural but contained substantive penal provisions.

The court explained that attachment and confiscation proceedings could not be applied to transactions that took place before 25 October 2016.

The High Court pointed out that under paragraph 18(e) of the Ganpati Dealcom judgment, authorities cannot initiate or continue prosecution or confiscation proceedings for pre-2016 transactions, and all such proceedings stand quashed. Applying this principle, the Gujarat High Court quashed the impugned attachment orders and all consequential actions.

The Revenue Department has now filed multiple Special Leave Petitions challenging the Gujarat High Court’s ruling. The Supreme Court will examine whether the 2016 Benami Amendment can be applied retrospectively and whether attachment orders issued for pre-2016 transactions are legally valid.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates