Orders Under Omitted Rule 96(10) Of CGST Rule, 2017 Post 8th Oct, 2024 Not Valid; No Savings Clause: Uttarakhand High Court

The Division Bench of Chief Justice G. Narendar and Justice Alok Mahra stated that there was no scope for the department to pass any order by invoking the provisions of rule 96(10) of CGST Rule, 2017 after the same was omitted on 8th October, 2024 without a saving clause in favour of the pending proceeding.

In this case, the assessee/petitioner who is the partnership firm filed the writ petition for declaring Rule 96 (10) of the Central Goods and Services Tax Rules, 2017 as ultra vires to Section 16 of the IGST Act, 2017 read with Section 54 of the CGST Act, 2017.

The assessee is engaged in the manufacture of Gold Bar & Jewellery etc., falling under Chapter 71 of the Central Excise Tariff Act, 1985.

The officers of the State Goods and Service Tax Department conducted audit of the assessee, wherein they alleged that assessee has claimed refund amounting to Rs.1,05,25,755/- under the head of IGST.

The department has confirmed the demand made in the show cause notice. The assessee has challenged the demand order passed by the department.

The assessee argued that the initiation of proceeding by the department is based on the alleged contravention of conditions set forth in rule 96(10) of the CGST Rules, 2017. Once the said rule was omitted from the statute book on 8^th October, 2024, the proceeding initiated by the department by way of show-cause notice could not have been continued further.

The department argued that at the time, when the show-cause notice was issued, Rule 96 (10) of the CGST Rule, 2017 was in existence, therefore, the department have rightly held that the deletion of Rule 96 (10) w.e.f. 08.10.2024 would operate prospectively where proceedings are initiated during the subsistence of the rule would continue to be governed by the said rules.

The bench observed that the Rule 96 (10) of CGST Rule, 2017 have been declared ultra vires by the High Court of Kerala in Sance Laboratories Pvt. Ltd. Vs. Union of India, 2024 (91) G.S.T.L. 245 (Ker.) and have subsequently been deleted vide Notification No.20/2024- Central Tax, dated 08.10.2024, therefore, it would be fruitless to again declare Rule 96 (10) of CGST Rule, 2017 as ultra vires the provisions of Section 16 of the IGST Act.

In this case, no new rule has been incorporated. On the contrary, rule 96(10) of CGST Rule, 2017 has itself been omitted from the statute book without any saving clause, at least the parties at this stage have not been able to show anything to the contrary, opined the bench.

The bench stated that the said provision of rule 96(10) of CGST Rule, 2017 being omitted unconditionally, without a saving clause in favour of the pending proceedings, all actions from the date of such omission of the rule must stop.

In view of the above, the bench allowed the petition.

Case Title: M/s Sri Sai Vishwas Polymers v. Union of India and Another

Case Number: Writ Petition (MB) No. 103 of 2025

Counsel for Petitioner/ Assessee: Bharat Raichandani, Akash Verma and Deepak Tamta

Counsel for Respondent/ Department: Saurav Adhikari

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