On Tuesday, the Supreme Court ruled that some parts of the law that made such transactions illegal cannot be enforced retroactively and invalidated the 2016 amendment to the benami transactions law.

The top court overturned the provisions of the Benami Transactions (Prohibition) Act of 1988, which mandated that anyone engaging in “benami” transactions face up to three years in prison, a fine, or both. Supreme Court refused to accept the government’s claim that the changes were merely procedural and not substantive.

Along with the demonetization of high-value bank notes with this intention, the legislative revisions were one of the government’s harshest measures in its fight against black money. After the 2016 amendment, the income tax department issued hundreds of letters to businesses, other organizations, and people and used the new rules’ retroactive character to file criminal complaints and confiscation actions against them. The parties involved will now be relieved because these actions are no longer valid.

The 28-year-old law’s revision would now only be applied to transactions that occurred after the changes were made, according to a Bench led by Chief Justice NV Ramana, which declared Section 3(2) “unconstitutional” because it was “manifestly arbitrary.”

The punitive “rem forfeiture” clause under Section 5 of the unamended Act is unconstitutional since it is arbitrary, according to the CJI, who wrote the judgment for the Bench. The 96-page verdict noted that because the clause is punitive, it can only be implemented going forward.

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Although other high courts had differing opinions on the matter, legal experts believe that the Supreme Court’s ruling that the modifications will only apply prospectively has brought much-needed clarity to the situation.

New statutes mandated the establishment of news authorities and gave them broad powers of discovery, inspection, and compelling attendance. Police, customs, income tax officers, and other relevant officers are also authorized to provide information in order to begin provisional attachments and confiscations of the properties.

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