Omission of CGST Rules 89(4B) and 96(10) causes all pending proceedings to lapse, absent saving clause

HC, following its ruling in Hikal Ltd., held that upon omission of Rules 89(4B) and 96(10) of the CGST Rules by Notification dated 08.10.2024, and in the absence of any saving clause or recourse to Section 6 of the General Clauses Act, all pending proceedings founded on the impugned Rules stand lapsed. This includes undisposed show cause notices, orders passed after 08.10.2024, and pre-08.10.2024 orders that are sub judice in appeal or writ and hence not "transactions past and closed." The writ petition was accordingly disposed of, while expressly reserving all parties' rights and contentions regarding any fresh or alternate proceedings.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the impugned orders, founded entirely on Rule 96(10) of the Central Goods and Services Tax Rules, 2017, can be sustained after the omission/repeal of that Rule without a savings clause.

1.2 Whether the controversy raised in the petitions is fully covered by the earlier decision of the Court in Hikal Ltd. and subsequent orders following that decision.

1.3 Whether quashing the impugned orders on the above ground precludes the authorities from initiating proceedings on any other issues arising in relation to the petitioners.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 & 2: Sustainability of orders based on Rule 96(10) CGST Rules, 2017 post-omission; applicability of precedent

Interpretation and reasoning

2.1 The Court records the statement of counsel for the petitioners that the petitions are "squarely covered" by the Court's earlier decision in Hikal Ltd. and subsequent orders including Aarti Drugs Ltd.

2.2 The Court also notes the statement of the State's counsel, after verification, that the issue involved in all the petitions "stands covered" by the decision in Hikal Ltd.

2.3 It is further recorded that the impugned orders in all the petitions are "entirely based on Rule 96(10) of the Central Goods and Services Tax Rules, 2017, which have since been omitted/repealed without a savings clause."

2.4 Proceeding on this admitted position, the Court follows the reasoning adopted in Hikal Ltd. to test the validity of the impugned orders, without re-opening or re-arguing the legal position already settled therein.

Conclusions

2.5 Applying the ratio of Hikal Ltd., the Court holds that the impugned orders, being entirely founded upon Rule 96(10) of the CGST Rules, 2017, which stands omitted/repealed without any savings clause, cannot be sustained.

2.6 All the writ petitions are allowed, and the impugned orders in each of them are quashed and set aside. Rule is made absolute in these terms.

Issue 3: Effect of quashing on other potential proceedings or issues

Interpretation and reasoning

3.1 At the request of the State's counsel, the Court considers whether its order quashing the impugned orders should restrict the authorities from taking steps on any other issues that may arise concerning the petitioners.

3.2 The Court determines that its present decision is confined to invalidating the impugned orders based solely on Rule 96(10) and does not adjudicate upon or foreclose other distinct issues or causes of action that may exist.

3.3 The Court also considers it appropriate to preserve all legal contentions of all parties regarding any future steps by the authorities, including challenges to their competence.

Conclusions

3.4 The Court clarifies that nothing in its order will preclude the respondents from taking steps, as they may be advised, in relation to any other issue that might be involved against the petitioners.

3.5 It is expressly clarified that all contentions of all parties, including on the competence of the respondents to initiate any such proceedings, are kept open.

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