TaxTMI 
TaxTMI 
TaxTMI 
Few provisions in the GST framework have generated as much debate as Section 13(8) of the Integrated Goods and Services Tax Act, 2017. In particular, Section 13(8)(b) dealing with intermediary services has lived a turbulent life-challenged in courts, debated in seminars, and interpreted differently across industries.
The controversy was rooted in a legal fiction. Even where services were provided to a recipient outside India, the statute deemed the place of supply to be the location of the intermediary in India.
What followed was inevitable.
Services rendered across borders
were told they never crossed them.
Exports, in spirit and substance,
were treated as domestic supplies.
Refunds disappeared, not because value never travelled abroad-
but because the law said it did not.
This fiction created a structural tension with the foundational philosophy of GST - taxation at the place of consumption.
Budget 2026 - Rewriting the Intermediary Story
Against this background, Budget 2026 has introduced a significant amendment to Section 13(8) of the IGST Act. The objective appears to be clear: to revisit the intermediary construct and align it more closely with the destination-based character of GST.
For businesses that operate in global service ecosystems-technology support centres, marketing support providers, global sourcing agents-this amendment represents more than a legislative adjustment. It signals a shift in how India views cross-border service flows.
But sometimes, the most powerful aspect of a legislative amendment lies not in the words that are written, but in the words that are missing.
And here lies the intriguing part.
The amendment does not appear to contain any saving clause preserving pending proceedings initiated under the earlier framework of Section 13(8).
At first glance, this might look like a routine legislative omission. Yet, in the world of statutory interpretation, silence can carry enormous consequences.
Because when the law changes without saving the past,
the past begins to ask a question. Can a proceeding survive
when the provision that created it disappears? Can a demand stand
when the very foundation of the demand fades away?
These questions are not merely philosophical. They are deeply legal.
And the answer may lie in a principle recently revisited by the Bombay High Court in the Hikal Limited, Yasho Industries Limited, Prashi Pharma Private Limited, M/s. Alkem Laboratories Ltd., Undercarriage and Tractor Parts Pvt Ltd., Nevatia Steel & Alloys Pvt. Ltd., Nikhil Nevatia, Augmont Enterprises Pvt. Ltd., Bharat Wire Ropes Limited, Murarilal Ramsukh Mittal, Kairav Chemofarbe Industries Limited, Kalp Overseas, Camlin Fine Sciences Limited, DD Cotton Pvt. Ltd., Mr. Mayank Arun Sekhsaria, Tridev Resins India Private Limited, Astec LifeSciences Limited, Versus Union of India, Central Board of Indirect Taxes and Customs Ministry of Finance, Office of the Commissioner, CGST and Central Excise, Navi Mumbai, The GST Council, Joint Commissioner (Adjudication), The Assistant Commissioner CGST & C. Ex. Division – I Belapur Commissionerate. - 2025 (9) TMI 806 - BOMBAY HIGH COURT
The Hikal Principle - When Omission Erases the Past
In a batch of writ petitions led by Hikal Limited, the Bombay High Court examined the legal consequence of omission of certain GST rules without a saving clause.
The Court observed that when a rule is omitted without any saving clause, the legal position is that the provision is treated as though it never existed, except in relation to matters that are already 'past and closed.'
In reaching this conclusion, the Court relied on long-standing constitutional bench precedents such as Rayala Corporation and Kolhapur Cane Sugar Works, which clarified that Section 6 of the General Clauses Act does not automatically apply to the omission of rules framed under a statute.
The consequence was striking.
Show cause notices that had not culminated in final orders became vulnerable.
Orders that had not attained finality were equally exposed.
The Court concluded that pending proceedings could not be sustained once the rules themselves were omitted without any saving clause, unless they qualified as transactions that were already 'past and closed.'
Intermediary Amendment - A Similar Question Emerges
The amendment to Section 13(8) now raises a parallel question.
Across the country, numerous proceedings have been initiated over the past several years alleging that services rendered to foreign entities fall within the scope of intermediary services. These disputes involve:
- Investigations by tax authorities
- Show cause notices
- Adjudication proceedings
- Appeals before appellate forums
If the statutory framework governing intermediary services has now been altered, and if no saving clause protects earlier proceedings, taxpayers may legitimately argue that such proceedings have lost their statutory anchor.
Because in tax law, a demand does not live independently.
It lives only as long as the provision that sustains it.
Remove the provision,
and the demand begins to lose its breath.
Transactions Past and Closed
Of course, the doctrine is not absolute.
Even under the principle recognised in Hikal, matters that are 'past and closed' remain unaffected. These typically include:
- Orders that have attained finality without challenge
- Cases where the litigation has reached its final judicial conclusion
- Situations where rights have crystallised beyond dispute
But where proceedings remain alive, pending, or under challenge, the omission of the underlying statutory provision can fundamentally alter the legal landscape.
In such cases, the question is not merely whether the law has changed.
The real question becomes:
Whether the law that created the dispute
still exists at all.
A Legislative Lesson
The intermediary amendment of Budget 2026 therefore teaches an important lesson in legislative drafting.
Sometimes, amendments speak loudly.
Sometimes, courts interpret aggressively.
But occasionally, the most powerful development emerges quietly-
from a provision that vanishes without leaving behind a saving clause.
And when that happens,
the law does not merely change.
It rewrites the past.
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By Rakesh B Jain and Sreeranjan NG