2026 (3) TMI 294 - HC - GST

Omission of Rule 96(10) removes the statutory basis for proceedings founded solely on it, making such recovery orders invalid.

Omission of Rule 96(10) of the Central Goods and Services Tax Rules without a saving clause removes the statutory foundation for proceedings and recovery ... Legal effect of the omission of Rule 96(10) - omitted without a saving clause - constitutional validity - refund recovery under tax law. Omission of rule removes statutory basis for actions taken under it - Whether the impugned recovery orders, having been issued solely under Rule 96(10) of the CGST Rules, survive after the omission of that Rule - HELD THAT: - The Court found that the recovery proceedings and the orders in original were predicated exclusively on Rule 96(10) of the Central Goods and Services Tax Rules. As Rule 96(10) was omitted with effect from 08.10.2024 and no saving clause was provided, the statutory basis for the impugned orders ceased to exist. Reliance upon earlier decisions of this Court reaching a similar conclusion was noted. Consequently, the impugned orders cannot be sustained and must be set aside for lack of any continuing legal foundation. [Paras 9, 10, 11] Impugned orders set aside as they were issued solely under the now-omitted Rule 96(10) which removed their statutory basis Final Conclusion: The writ petitions are allowed; the impugned orders passed by the first respondent are set aside for want of statutory basis following omission of Rule 96(10) of the CGST Rules, and there shall be no order as to costs. Pending miscellaneous petitions, if any, stand closed. Issues: Whether the omission of Rule 96(10) of the Central Goods and Services Tax Rules, 2017 (w.e.f. 08.10.2024) without a saving clause renders proceedings and recovery orders issued under that rule without any legal basis and therefore liable to be set aside.Analysis: The Court examined the legal effect of the omission of Rule 96(10) of the Central Goods and Services Tax Rules, 2017, including whether proceedings founded solely on that rule survive after its omission in the absence of a saving clause. The Court considered the relationship of Rule 96(10) to Section 16 of the Integrated Goods and Services Tax Act, 2017 and constitutional challenges raised under Article 14 and Article 19 of the Constitution of India. The Court also reviewed prior decisions of the High Court on identical questions and noted that where an impugned order is founded exclusively on a statutory rule which is subsequently omitted without a saving provision, the statutory basis for such order ceases to exist.Conclusion: The omission of Rule 96(10) of the Central Goods and Services Tax Rules, 2017 (w.e.f. 08.10.2024) without a saving clause removes the legal foundation for proceedings and recovery orders issued solely under that rule; accordingly, the impugned recovery orders dated 21.12.2023 are set aside. The decision is in favour of the assessee.