Page 19 - Banking Finance October 2022

LEGAL UPDATE

Legal

Benami Act of 2016 cannot absence of the transaction being de- tional high court has declared Section
clared illegal through a criminal trial. 12A mandatory also, the plaintiff will
be used retrospectively: not be entitled to relief.
Supreme Court Pre-mediation in commer-
In a landmark decision, the Supreme cial cases mandatory Medicine purchases by in-
Court ruled that the Benami Transac- The Supreme Court held that the pre- patients exempt from GST:
tion (Prohibition) Amendment Act of mediation process in commercial cases
TN AAR
2016 will apply prospectively, thus is mandatory and suits not complying
Supply of medicines and consumables
firewalling benami properties trans- with this provision would be rejected.
along with other services provided to
acted between 1988, when the origi-
A Bench of Justices KM Joseph and
an inpatient from admission until dis-
nal law was enacted, and 2016, when
Hrishikesh Roy, in Patil Automation Pvt
charge to be treated as 'composite
the amended law came into being, Ltd vs Rakhija Engineers, held that not
supply' and no GST to be applicable.
from confiscation and shielding per- complying with the mediation stage
However, medicines supplied to outpa-
ceived offenders from the mandatory would defeat the purpose of the Com-
tient will attract GST, says Tamil Nadu
three-year jail term. mercial Courts Act 2015.
Authority for Advance Rulings
Terming as illegal the punitive actions "We hold that any suit instituted vio- (TNAAR).
taken by various agencies through ret- lating the mandate of Section 12A
This ruling was given after GST Council
rospective application of the 2016 law (pre-mediation) must be visited with
recommended GST to be levied on
to benami properties transacted for 28 the rejection of the plaint. We, how-
non-ICU room rent above Rs. 5,000,
years without sanction of an estab- ever, make this declaration effective
but before the notification specifying
lished procedure, a bench of Chief Jus- from August 20 so that concerned
date of July 18 was issued.
stakeholders become sufficiently in-
tice N V Ramana and Justices Krishna
formed," the court said in the order. Applicant, the Chennai-based Be Well
Murari and Hima Kohli declared Sec-
Hospitals Private Limited moved
tions 3(2) and 5 of the Act as unconsti- The apex court said the power to re-
TNAAR seeking advance ruling on GST
tutional. ject the plaint can be exercised even
applicability for medicines and
suo motu by the court.
Under Section 3(2), punishment of
consumables supplied to inpatients and
three years is mandated for those who The court also clarified that in cases
outpatients by the pharmacy unit of
entered into benami transactions from where plaints have been rejected and the hospital for diagnosis or treatment
September 5, 1988 to October 25, no steps taken in the period of limita- during the patient's admission in hos-
2016. Section 5 of the Act allowed the tion, the matter cannot be reopened pital would be considered as 'Compos-
based on this declaration.
central government to confiscate ite Supply' of healthcare service as
benami properties without there being Lastly, the court said if the plaint is filed under GST and consequently avail ex-
laid-down procedure, and even in the violating Section 12A after the jurisdic- emption.
BANKING FINANCE | OCTOBER | 2022 | 19