Notification 20/2024 repeal of Rules 89(4B), 96(10) lapses pending actions; exporters entitled IGST refund under Rule 96

HC held that Notification No. 20/2024, omitting Rules 89(4B) and 96(10) of the CGST Rules without any saving clause, applies to all pending proceedings and orders not constituting "transactions past and closed." In the absence of a saving provision or recourse to Section 6 of the General Clauses Act, all undisposed show cause notices, pending adjudications, and orders not attaining finality due to pending appeals or writ petitions stand lapsed. As the appellate Tribunal is not constituted, impugned appellate orders cannot be treated as final. The impugned departmental actions were quashed and petitioners were held entitled to refund of IGST on exports in accordance with Rule 96.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether omission of Rules 89(4B) and 96(10) of the Central Goods and Services Tax Rules, 2017 by Notification No. 20/2024 dated 8 October 2024, without any saving clause, renders those provisions inapplicable to all pending proceedings and cases.

1.2 Whether show cause notices, orders-in-original, and orders-in-appeal issued or passed under the erstwhile Rules 89(4B) and 96(10), in matters not yet attaining finality, stand lapsed in view of such omission.

1.3 Whether proceedings where orders-in-appeal have been passed, but further statutory appeal is unavailable due to non-constitution of the Appellate Tribunal, can be treated as "transactions past and closed" or as pending proceedings to which the omission applies.

1.4 Consequential entitlement of the petitioners to refund of IGST and related reliefs upon the omission of Rules 89(4B) and 96(10).

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Applicability of omission of Rules 89(4B) and 96(10) to pending proceedings

Legal framework (as discussed):

2.1 The Court referred to Notification No. 20/2024 dated 8 October 2024 by which Rules 89(4B) and 96(10) of the CGST Rules, 2017 were omitted without any saving clause.

2.2 The Court relied on the reasoning of a Coordinate Bench holding that, though the omission is prospective, it applies to "pending proceedings/cases", and on the Bombay High Court's exposition of common law principles on repeal/omission without savings, including the concept of "transactions past and closed".

Interpretation and reasoning:

2.3 The Coordinate Bench had held that omission of Rule 96(10) by Notification No. 20/2024, being prospective, nonetheless applies to all pending proceedings/cases where final adjudication had not taken place as on 8 October 2024, and that writ petitions challenging show cause notices and orders-in-original invoking Rule 96(10) constitute pending proceedings.

2.4 The Bombay High Court, applying common law principles of repeal/omission in the absence of a saving clause or recourse to Section 6 of the General Clauses Act, held that all pending proceedings (including undisposed show cause notices, orders passed after 8 October 2024, and orders passed before that date but under challenge in appeal or writ proceedings so as not to be "transactions past and closed") stand lapsed and are not preserved.

2.5 The Court, on a combined reading of the above judgments, held that omission of Rules 89(4B) and 96(10) without a saving clause renders those provisions redundant from inception for all matters that are not "transactions past and closed", and that such omission applies to all proceedings/cases/petitions pending adjudication before the Court or before adjudicating authorities, as well as to orders made before 8 October 2024 but not yet finalised due to appeals or challenges.

Conclusions:

2.6 The omission of Rules 89(4B) and 96(10) by Notification No. 20/2024 applies to all pending proceedings/cases as on 8 October 2024, including those pending before adjudicating authorities and courts, and to non-final orders under challenge; such proceedings and actions based on the omitted rules stand lapsed.

Issue 2: Survival of departmental actions (show cause notices, orders-in-original, orders-in-appeal)

Interpretation and reasoning:

2.7 The respondent departments argued that the omission of the Rules is only prospective, and that show cause notices and orders already issued, especially where appeals had been concluded and orders-in-appeal passed prior to the omission, stand saved and cannot be set aside.

2.8 The Court, following the Coordinate Bench and Bombay High Court, treated all such matters, where final adjudication had not taken place or where orders were under challenge, as pending proceedings, not as "transactions past and closed".

2.9 It was held that, in the absence of any saving clause, and applying the principles that a repealed/omitted provision (except for transactions past and closed) is to be treated as if it never existed, actions founded on Rules 89(4B) and 96(10) that had not attained finality could not be carried forward and would lapse.

Conclusions:

2.10 All impugned departmental actions, including show cause notices, orders-in-original and orders-in-appeal based on Rules 89(4B) and 96(10), in matters pending as on 8 October 2024, stand quashed and set aside, and no further proceedings based thereon are to be carried forward.

Issue 3: Effect of non-constitution of the Appellate Tribunal and characterization of "transactions past and closed"

Interpretation and reasoning:

2.11 The Court noted that the Appellate Tribunal is not yet constituted, rendering the statutory appellate remedy against orders-in-appeal unavailable and thereby constraining the petitioners to approach the High Court under writ jurisdiction.

2.12 In that context, the Court held that, since the petitioners lack an effective appellate remedy solely due to non-constitution of the Tribunal, the orders-in-appeal cannot be treated as having attained finality and, therefore, do not fall within the category of "transactions past and closed".

2.13 Accordingly, such orders-in-appeal, being under challenge in writ petitions and lacking finality, are to be treated as pending proceedings to which the omission of Rules 89(4B) and 96(10) applies.

Conclusions:

2.14 Orders-in-appeal challenged before the Court, in the absence of an available Tribunal remedy, are pending proceedings and not "transactions past and closed"; such orders, being founded on the omitted rules, stand lapsed.

Issue 4: Consequential reliefs and entitlement to refund

Interpretation and reasoning:

2.15 Following the Coordinate Bench's ruling that, upon omission of Rule 96(10), petitioners are entitled to maintain refund claims of IGST paid on export of goods, and adopting the Bombay High Court's conclusion that pending proceedings lapse, the Court held that the basis for rejection or curtailment of refunds no longer survives.

2.16 It was directed that all pending applications for refund must be processed, and where applications had been rejected and refunds refused on the basis of the omitted rules, such applications stand restored for further processing in accordance with law.

Conclusions:

2.17 All writ petitions are allowed; the impugned departmental actions are quashed and set aside.

2.18 The petitioners are entitled to refund; all pending refund applications shall be processed, and previously rejected applications shall stand restored and be further processed.

2.19 The necessary steps, including processing of refunds, shall be completed within twelve weeks from receipt of the writ of the order; there is no order as to costs.

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