Pending Proceedings Under Omitted CGST Rules 89(4B) & 96(10) Lapse In Absence Of Savings Clause: Bombay High Court

The Bombay High Court has held that all pending proceedings under the omitted CGST Rules 89(4B) & 96(10) lapse in the absence of a savings clause. The bench agreed with the assessee/petitioners that the provisions of Section 6 of the General Clauses Act are not attracted and therefore the pending proceedings can claim no immunity or protection. Unless the Respondents can establish that Section 6 of the General Clauses Act, 1897, applies or that there was any savings clause in the CGST Act or in the Notification, based merely on Clause 1(2) or the GST Council minutes, the pending proceedings that had not attained finality cannot be held as saved. The Clause relied upon is not a savings clause. It does not save pending proceedings, stated the bench consists of Justices M.S. Sonak and Jitendra Jain. The main issues involved in all these Petitions relate to the constitutional validity of the Rule 89 (4B) and/or 96(10) of the Central Goods and Service Tax Rules, 2017 (CGST Rules). Upon the omission of these Rules (impugned Rules) vide Notification dated 08 October 2024, notifying The Central Goods and Service Tax (Second Amendment) Rules, 2024 (2024 Amendment Rules), the Petitioners, contend that any savings clause does not back such omission, and therefore, all pending proceedings, impugned in these Petitions would stand lapsed. The assessee contended that Rule 96(10) was ultra vires and unconstitutional. Furthermore, the assessee has contended that it would have been eligible to claim a refund under Rule 89, and the situation would thereby become revenue neutral. The assessee further argued that any savings clause did not back such omission or repeal, and therefore, the common law principle regarding repeals obliterating the repealed provision from the statute book or rule book would apply. The department argued that Section 6 of the General Clauses Act applies to the omission or repeal of the impugned Rules because the 2024 Amendment Rules are enacted by exercising the powers under Section 164 of the CGST Act, and therefore, the Rules qualify to be regarded as “Central Act” at least for the purposes of Section 6 of the General Clauses Act. The bench was satisfied that the Petitioners are entitled to succeed on the ground that this is a case of omission or repeal of the impugned Rules without any savings clause to protect the pending proceedings. The bench observed that in any case, a review of these Rules makes it clear that they are not purely procedural but impact substantive rights of the parties. Therefore, the removal or repeal of Rules 89(4B) and 96(10) would essentially erase these Rules from existence as if they had never been enacted or passed, and they should be regarded as provisions that never existed, except in relation to “transactions past and closed”. An omission or a repeal without any savings clauses would lapse the impugned proceedings or orders unless they qualify as “transactions past and closed”, stated the bench. The bench held that following the omission or repeal of the impugned Rules, i.e., Rules 89(4B) and 96(10) of the CGST Rules via Notification dated 08 October 2024, and in the absence of any saving clauses or the benefit of Section 6 of the General Clauses Act, all pending proceedings—such as undisposed show cause notices, orders disposing of show cause notices issued after 08 October 2024, or even orders made before 08 October 2024 but not yet finalised due to appeals before the Appellate Authorities or challenges before this Court, thus not constituting “transactions past and closed”—are not preserved and will stand lapsed. In view of the above, the bench quashed and set aside the impugned show-cause notices and impugned orders. Case Title: Hikal Limited v. Union of India Case Number: WRIT PETITION NO. 78 OF 2025 Counsel for Petitioner/Assessee: Mr. V. Shridharan, a/w Mr. Sahil Parghi, Mr. Dhananjay Sethuraj and Ms. Vidhi Jain Counsel for Respondent/Department: Mr. J. B. Mishra a/w Mr. Ashutosh Mishra a/w Mr. Rupesh Dubey for the Respondent No. 1 and Mr. Karan Adik a/w Mr. Abhishek R. Mishra a/w Ms. Sangeeta Yadav, Ms. Maya Majumdar a/w Mr. Rupesh Dubey for Respondents No. 2 to 6 Click Here To Read/Download The Order

Pending Proceedings Under Omitted CGST Rules 89(4B) & 96(10) Lapse In Absence Of Savings Clause: Bombay High Court

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Pending Proceedings Under Omitted CGST Rules 89(4B) & 96(10) Lapse In Absence Of Savings Clause: Bombay High Court

Mehak Dhiman

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