TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 806
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.... WRIT PETITION NO. 78 OF 2025 WITH WRIT PETITION NO. 465 OF 2021, WRIT PETITION NO. 2828 OF 2021, WRIT PETITION NO. 3691 OF 2021, WRIT PETITION NO. 405 OF 2021, WRIT PETITION NO. 2044 OF 2022, WRIT PETITION NO. 3163 OF 2021, WRIT PETITION (L) NO. 8737 OF 2022, WRIT PETITION NO. 1773 OF 2024, WITH WRIT PETITION NO. 4640 OF 2022 WITH CHAMBER ORDER (CHOL) NO. 286 OF 2022 IN WRIT PETITION NO. 4640 OF 2022, WRIT PETITION (L) NO. 11740 OF 2025, WRIT PETITION NO. 2745 OF 2025, WRIT PETITION (L) NO. 15183 OF 2024, WRIT PETITION NO. 2097 OF 2025, WRIT PETITION NO. 3522 OF 2024, WITH WRIT PETITION NO. 3013 OF 2023 WITH INTERIM APPLICATION (L) NO. 31922 OF 2023 IN WRIT PETITION NO. 3013 OF 2023, WRIT PETITION NO. 2052 OF 2025, WRIT PETITION (L) NO. 39729 OF 2022, WRIT PETITION NO. 6795 OF 2023, WRIT PETITION NO. 1493 OF 2025, WITH WRIT PETITION NO. 1006 OF 2024 WITH INTERIM APPLICATION NO. 7229 OF 2025 IN WRIT PETITION NO. 1006 OF 2024, WRIT PETITION NO. 12927 OF 2022, WITH WRIT PETITION NO. 739 OF 2025 WITH INTERIM APPLICATION NO. 11291 OF 2025 IN WRIT PETITION NO. 739 OF 2025, WRIT PETITION NO. 674 OF 2024, WRIT PETITION NO. 1325 OF 2025, WRIT PETITION NO. 1614 OF 2025, WRIT PETITION NO. 46....
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.... Commissioner of Central Goods and Service Tax, Mumbai, Commissioner of State Goods and Service Tax, Mumbai, Principal Additional Director General, Directorate General of GST Intelligence, Deputy Director, Directorate General of GST Intelligence, Mumbai Zonal, Senior Intelligence Officer, Directorate General of GST Intelligence, Mumbai Zonal Unit, Deputy Commissioner of Customs, Joint Director, Directorate General of Goods & Services Tax Intelligence Mumbai, Intelligence Officer, Group A, Superintendent/ Appraiser/ Senior Intelligence Officer, Additional Director General, Superintendent of Customs, IGST (R) (X), Mumbai, Anti Evasion Wing. W. P. No. 78 / 2025 For the Petitioner: Mr. V. Shridharan, Senior advocate a/w Mr. Sahil Parghi, Mr. Dhananjay Sethuraj and Ms. Vidhi Jain i/by Sriram Sridharan. For the Respondent No. 1: Mr. J. B. Mishra a/w Mr. Ashutosh Mishra a/w Mr. Rupesh Dubey i/by A. A. Ansari, For the Respondents No. 2 to 6: Mr. Karan Adik a/w Mr. Abhishek R. Mishra a/w Ms. Sangeeta Yadav, Ms. Maya Majumdar a/w Mr. Rupesh Dubey. W.P. No. 465 / 2021 For the Petitioner Mr. Abhishek A Rastogi, Ms. Pooja M. Rastogi, Ms. Meenal Songire a/w Ms. Arya More. For the Respon....
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..../w Ms. Niyati Mankad a/w Ms. Priyanka Singh for the Respondents W.P. No. 2745 / 2025 Mr. Vishal Agarwal a/w Ms. Yashashvi Jain for the Petitioners Mr. Jitendra B. Mishra, Ms. Sangeeta yadav, Ms. Niyati Mankad, Mr. Ashutosh Mishra Mr. Rupesh Dubey Ms. Priyanka Singh Ms. Jaymala Ostwal a/w Ms Niyati Mankar (thr. VC) for the Respondents. W.P. (L) No. 15183/2024 Dr. Avinash Poddar, Ms. Deepali Kamble a/w Ms. Anchal Poddar for the Petitioner Mr. J. B. Mishra, Ms. Sangeeta Yadav, Mr. Ashutosh Mishra a/w Mr. Rupesh Dubey for the Respondent W.P. No. 2097/2025 Mr. V. Sridharan, Senior Advocate, Mr. Sahil Parghi, Mr. Dhananjay Sethuraj and Ms. Vidhi Jain i/by Sriram Sridharan for the Petitioner Mr. Satyaprakash Sharma a/w Mr Saket R Ketkar, Ms. Sangeeta Yadav Ms. Harpreet Kaur for Respondent No. 4 & 5 W.P. No. 3522 / 2024 Mr. Prakash Shah, Senior Advocate, Mr. Jas Sanghavi, Mr. Suyog Bhave, Ms. Linzy Sharan i/by PDS Legal for the Petitioner Mr. Satyaprakash Sharma, Mr. Abhishek Mishra for the Respondent No. 2 to 5 W.P. No. 3013/2023 a/w IAL/31922/2023 Mr. Vishal Agarwal a/w Mr. Abhishek Deodhar and Mr. Rishabh Jain for the Petitioner Mr. Subir Kumar, Kavita Shukla and Niyanta....
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.... for Respondent WP/4658/2025 Mr. Stebin Mathew i/b Ms. Dishya Pandey, Advocate for the Petitioner. Mr. Satyaprakash Sharma a/w Ms. Megha Bajoria, Adv. Harpreet Kaur Sethi, for Respondent No. 2 & 3. Ms. Sangeeta Yadav, Adv. for Respondent. WP/5816/2025 Mr. Prakash Shah, Senior Advocate a/w Mr. Jas Sanghavi, Mr. Mihir Mehta, Mr. Mohit Rawal i/b PDS Legal, for the Petitioner. Mr. Karan Adik a/w Adv. S. D. Deshpande, Adv. for Respondent WP/5815/2025 Mr. Prakash Shah, Senior Advocate a/w Mr. Jas Sanghavi, Mr. Mihir Mehta, Mr. Mohit Rawal i/b PDS Legal, for the Petitioner. Mr. Karan Adik a/w Adv. S. D. Deshpande, Adv. for Respondent WP(st)/15698/2025 Mr. Prakash Shah, Senior Advocate a/w Mr. Jas Sanghavi, Mr. Kshitij Viswanath, Ms. Linzy Sharan i/b PDS Legal, for the Petitioner. Mr. Karan Adik a/w Ms. Sangeeta Yadav, Mr. Abhishek R. Mishra and Mr. Satyaprakash Sharma a/w Sangeeta Yadav, Adv. for Respondent No. 2 to 4 and 5, 6. WP/11356/2025 Mr. V. Sridharan, Senior Advocate a/w Mr. Sahil Parghi, Mr. Dhananjay Sethuraj & Ms. Vidhi Jain i/b Mr. Sriram Sridharan, Advocate for the Petitioner WP/11355/2025 Mr. V. Sridharan, Senior Advocate a/w Mr. Sahil Parghi, Mr. Dhananjay ....
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.... 3. Since substantially common issues of law and fact arise in these Petitions, the learned Counsel for the parties agree that a common order could dispose of these Petitions. 4. The learned counsel for the parties agreed that Writ Petition No.78 of 2025, instituted by Hikal Limited, be treated as the lead Petition for the disposal of this batch of Petitions. Accordingly, we propose to treat this Petition as the lead Petition. THE CHALLENGE IN THESE PETITIONS. 5. The challenge in most of these Petitions is to Rule 89 (4B) and/or 96(10) of the Central Goods and Service Tax Rules, 2017 (CGST Rules). Upon the omission of these Rules (impugned Rules) vide Notification dated 08 October 2024, notifying The Central Goods and Service Tax (Second Amendment) Rules, 2024 (2024 Amendment Rules), the Petitioners, without prejudice to their challenge to the impugned Rules, contend that any savings clause does not back such omission, and therefore, all pending proceedings, impugned in these Petitions would stand lapsed. 6. In all these Petitions, the learned Counsel for the Petitioners have made a categorical statement that the allegations in the impugned show cause notices, based upon which ....
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....toms dated 13.10.2017 and exports nearly 90% of its finished goods. The remaining 10% is cleared domestically. (b) Mahad, Raigad (Domestic Tariff Area unit) for which the Petitioner procures raw materials, inter alia, under Advance Authorisation licenses and avails IGST exemption under Notification No. 79/2017-Customs dated 13.10.2017. In some cases, the Petitioner also undertakes the import of goods on payment of IGST. 11. The Petitioner has pleaded that the finished goods manufactured by the Petitioner are either exported, with or without the payment of IGST, or sold domestically. On exports made with payment of IGST, the Petitioner claimed a refund under Section 54 of the CGST Act, read with Section 16 of the IGST Act. These refunds were duly sanctioned to the Petitioner. The Department did not challenge the refund sanction orders. 12. In or around 2022, an investigation was initiated by the Department for the 2017-18 to 2019-20 ('disputed period') based on the suspicion that the IGST refund claimed by the Petitioner is in violation of Rule 96(10) of the CGST Rules, 2017, since certain goods were imported against advance authorisation licenses. This investigation culminated ....
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.... the main issues involved in the lead Petition relate to the constitutional validity of the impugned Rules and, in any event, to the lapse of pending proceedings consequent upon the repeal or omission of the impugned Rules, which, the Petitioners contend, were not backed by any savings clause. PETITIONERS CONTENTIONS 19. Mr Sridharan, learned Senior Counsel appearing for the Petitioner in the lead Writ Petition No. 78 of 2025, and the other learned Counsel appearing on behalf of the Petitioners, advanced several contentions questioning the constitutional validity of Rules 89(4B) and 96(10) of the CGST Rules. They submitted that these Rules were ultra vires the parent Act and, in any event, they were affected by the vice of manifest arbitrariness. They submitted that the effect of the said Rules was grossly disproportionate and, accordingly, there was a violation of the doctrine of proportionality. They submitted that the impugned Rules, far from promoting the legislative and executive policies, were frustrating such policies. They submitted that in case of conflict between legislative and executive policy on one hand and the rules made to implement such policy, it is the former t....
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.... of any savings clause in the Notification dated 08 October 2024 was conspicuous and deliberate. 23. Accordingly, Mr Sridharan submitted that the common law principle that an omitted or repealed provision is entirely obliterated from the statute book, as if it had never been enacted, applies with full force to the present case, except regarding "transactions past and closed". He submitted that the impugned show cause notices or orders issued thereon, citing non-compliance with the omitted or repealed Rules, are invalid and cannot be enforced. He relied upon the decisions of the Constitution Bench in the case of Rayala Corporation (P) Ltd. Vs Director of Enforcement (1969) 2 SCC 412, Kolhapur Cane Sugar Works Ltd. And Anr. Vs Union of India (2000) 2 SCC 536, Fibre Boards (P) Ltd. Vs Commissioner of Income-tax (2015) 10 SCC 333, Shree Bhagwati Steel Rolling Mills Vs Commissioner of Central Excise (2015) 326 ELT 209, and Gammon India Limited Vs Special Chief Secretary & Ors (2006) SCC 354, to support his arguments. 24. Mr Sridharan relied on Keshavan Madhava Menon Vs State of Bombay AIR 1951 SC 128, to explain the concept of "transactions past and closed". He emphasised passages fro....
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....et, submitted that there was nothing unconstitutional or ultra vires in so far as Rules 89(4B) and 96(10) of the CGST Rules were concerned. They submitted that the striking down of Rule 96(10) by the Kerala High Court would not preclude this Court from upholding the validity of the said Rules. They submitted that the impugned Rules were a fiscal measure, and greater latitude should be shown to the Rule-Making Authorities in such matters. Accordingly, they submitted that the challenge to the constitutionality of the impugned Rules or the argument that the impugned Rules were ultra vires the parent Act must be rejected. 29. The learned Counsel for the Respondents submitted that Section 6 of the General Clauses Act was applicable because the 2024 Amendment Rules were enacted in exercise of powers by Section 164 of the CGST Act. Therefore, such Rules must be regarded as "Central Act" for the purposes of Section 6 of the General Clauses Act. They relied on Chandpaklal Shah & Anr Vs Reliance Industries Ltd 2017 (354) ELT 289 (SC), State of Punjab Vs Mohar Singh 1954 (2) SCC 483 M/s Highpoint Hotels Pvt Ltd Vs The Excise Commissioner in Karnataka WP/27575/2017 & connected matters, decide....
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....use, and therefore, the common law principle relied upon by the Petitioners would not apply in this case. 34. The learned Counsel for the Respondents relied upon Section 166 of the CGST Act to submit that the savings clause therein saves all pending post the omission or repeal of the impugned Rules. They pointed out that the 2024 Amendment Rules were laid before the parliament. Mr Adik went to the extent of submitting that until the parliament approved such Rules, they did not even enter into force. They submitted that in any event, the savings clause in Section 166 was sufficient to protect the pending proceedings. 35. Mr Subir Kumar submitted that the impugned show cause notices were issued under Section 73 of the CGST Act, read with Section 20 of the IGST Act, 2017. He submitted that neither of these provisions had been omitted or repealed. Therefore, he submitted that omission of the impugned Rules would not affect the impugned show cause notices or the orders made thereon. He included several decisions in his written submissions, but during arguments, cited only Jayanthilal Amrathlal Vs Union of India (1972) 4 SCC 174. 36. Based on the above contentions, the learned Counsel....
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....e expressly overruled by the Constitution Bench in Kolhapur Canes Sugar Works Ltd (supra). He submitted that the decisions in the case of M/s. High Point Hotels Pvt. Ltd. (supra) and Laxmi Board and Paper Mills Pvt. Ltd. (supra), which take the same view as in Saurashtra Cements (supra) and Falcon Tyres Ltd. (supra), also run counter to the decision of the Constitution Bench in Kolhapur Canes Sugar Works Ltd. (supra). 41. For all the above reasons, Mr. Sridharan and the other learned Counsel for the Petitioners in this batch of Petitions submitted that the Rule in all these Petitions may be made absolute. ISSUES FOR DETERMINATION 42. Based on the pleadings and rival contentions, the following main issues arise for determination in this batch of Petitions: - (i) Whether the impugned Rules are ultra vires the CGST Act or otherwise unconstitutional, null and void? (ii) What is the legal effect of the omission of the impugned Rules vide Notification dated 08 October 2024 (without any protection of Section 6 of the General Clauses Act or savings clauses in the Rules or the parent Act, as contended by the Petitioners) on all the proceedings and orders impugned in these Petitions? ....
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....dity of statutes or rules unless they are absolutely necessary and the case at hand cannot be disposed of without dealing with and resolving such issues. The Hon'ble Supreme Court has held in several cases that academic exercise in constitutional law is not for Courts but for jurists, and the Court should not enter into such issues and interpret them unless it is really necessary. Therefore, if a Petition can be disposed of on any other issue by granting at least substantially the relief which the Petitioner seeks without examining the constitutional validity of a statutory provision or even the rules made thereunder, then the Constitutional Court should not rush to examine and decide on the issue of constitutional validity, merely because it may be empowered to do so. 46. The above principles have been settled and explained inter alia in Bhut Nath Mete V. State of W.B. (1974) 1 SCC 645; Sumedico Corpn V. R.P.F. Commr. (1998) 8 SCC 381, K. I. Shepherd V. Union of India (1987) 4 SCC 431 and Central Organisation of T.N. Electricity Employees V. T.N. Electricity Board (2005) 8 SCC 729, 745. 47. In this batch of Petitions, for reasons that we will discuss elaborately hereafter, we ar....
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....of India. Therefore, the Family Court at Bandra, Maharashtra, could not have ignored the striking down of Section 10-A (1) of the Divorce Act by the Kerala High Court, on the ground that such a decision was not binding upon the Courts and Authorities in the State of Maharashtra. 52. In Commissioner of Income-Tax, Vidarbha (supra), another Coordinate Bench of this Court, comprising Kantawala, CJ and Chandurkar, J (as His Lordship then was), rejected the contention that the striking down of Section 140-A(3) of the Income Tax Act by the Madras High Court in the case of A.M. Sali Maricar And Anr. Vs Income-Tax Officer And Anr (1973) 90 ITR 116 was not binding upon the Income Tax Authorities or the Income Tax Tribunals in the State of Maharashtra. The Coordinate Bench held that the Income Tax Act was an all-India statute. If an Income Tax Tribunal in Madras was bound by the decision in A.M. Sali Maricar (supra), then, in the absence of any contrary decision given by any other competent High Court, binding on the authorities and tribunals in the State of Maharashtra, such authorities and tribunals in the State of Maharashtra must proceed based on the law declared by the High Court, even....
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....ify that in this batch of Petitions we are not addressing the issue of Rules 89(4B) and 96(10) of the CGST Rules being ultra vires the parent act or otherwise unconstitutional, null and void because, for reasons discussed hereafter, we are satisfied that these Petitions should succeed on the ground of the effect of omission of the said two Rules, without any effective savings clause to protect the pending proceedings. LEGAL EFFECT OF THE OMISSION OR REPEAL OF THE IMPUGNED RULES WITHOUT PROTECTION OF ANY SAVINGS CLAUSES OR SECTION 6 OF THE GENERAL CLAUSES ACT (SECOND ISSUE) 58. The Central Government, in the exercise of powers conferred upon it by Section 164 of the CGST Act, issued a Notification dated 08 October 2024 containing the 2024 Amendment Rules by which the impugned Rules came to be omitted. The relevant extract of 2024 Amendment Rules as contained in the Notification dated 08 October 2024 is transcribed below for the convenience of reference: - Notification-GST-Central GST (CGST) MINISTRY OF FINANCE (Department Of Revenue) (CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS) NOTIFICATION NO. 20/2024-Central Tax New Delhi, the 8th October, 2024. G.S.R. 626(E). In exerc....
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....8 Note: The principal rules were published in the Gazette of India. Extraordinary, Part II. Section 3, Sub-section (i) vide number G.S.R. 610(E), dated the 19th June. 2017 No. 3/2017-Central Tax. dated the 19th June, 2017 and were last amended vide notification number G.S.R. 376 (E). dated the 10th July 2024 No. 12/2024-Central Tax. dated the 10th July 2024. 59. From the above, it is indisputable that the impugned rules stand deleted. The only dispute revolves around the scope of such omission or repeal. The Petitioners contend that any savings clause did not back such omission or repeal, and therefore, the common law principle regarding repeals obliterating the repealed provision from the statute book or rule book would apply. The Respondents admit the omission or repeal but contend that the common law rule would not apply because pending proceedings have been expressly saved. 60. Justice G P Singh, in his "Principles of Statutory Interpretation", 15th edition, has explained that under the common law, the consequences of the repeal of a statute are very drastic. Except as to transactions past and closed, a statute after its repeal is treated as completely obliterated as if it ....
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....provisions in Rule 89(4B) and 96(10) of the CGST Rules were not substantive provisions affecting the rights of importers and exporters. In any case, a review of these Rules makes it clear that they are not purely procedural but impact substantive rights of the parties. Therefore, the removal or repeal of Rules 89(4B) and 96(10) would essentially erase these Rules from existence as if they had never been enacted or passed, and they should be regarded as provisions that never existed, except in relation to "transactions past and closed". 65. Thus, subject to further discussion on whether this is a case of omission or repeal backed by any savings clauses, it is evident that an omission or a repeal without any savings clauses would lapse the impugned proceedings or orders unless they qualify as "transactions past and closed". TRANSACTIONS PAST AND CLOSED [ THIRD ISSUE] 66. In these matters, not even an attempt was made by the learned Counsel for the Respondents to contend that the impugned show cause notices or for that matter, the orders challenged in these Petitions, were covered by the expression "transactions past and closed". In cases where the show cause notices did not culmin....
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.... Act of Parliament is repealed," said Lord Tenterden in Surtees v. Ellison, (1829) 9 B. and C. 750 at p. 752: (7 L. J. K. B. 335), "it must be considered (except as to transactions past and closed) as if it had never existed. That is the general rule." Tindal C. J. states the exception more widely. He says (in Kay v. Goodwin, (1830) 6 Bing. 576: (8 L.J.C.P. 212): "The effect of repealing a statute is to obliterate it as completely from the records of the Parliament as if it had never been passed; and it must be considered as a law that never existed except for the purpose of those actions which were commenced, prosecuted and concluded whilst it was an existing law." (p. 350) 12. Again, Crawford in his book on "Statutory Construction" dealing with the general effect of the repeal of an Act states the law in America to be as follows: "A repeal will generally, therefore, divest all inchoate rights which have arisen under the repealed statute, and destroy all accrued causes of action based thereon. As a result, such a repeal, without a saving clause, will destroy any proceeding, whether not yet begun, or whether pending at the time of the enactment of the repealing Act, and not alrea....
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....ffect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed." 70. From the analysis of Section 6 of the General Clauses Act, 1897, it is evident that for the savings clause to apply, the repeal of any enactment must be brought about by the following: (a) by "this Act", i.e., the General Clauses Act; or (b) any Central Act; or (c) Regulation. 71. The expression "this Act" offers no difficulty because it means the General Clauses Act, 1897. Similarly, the expression "Central Act" is defined under Section 3(7) of the General Clauses Act to mean an Act of Parliament and shall include an Act of the Dominion legislature or Indian legislature before the commencement of the Constitution, and an Act made before such commencement by the Governor General in Council or the Governor General acting in legislative capacity. The expression "regulation" has been defined und....
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.... Section 6 of the General Clauses Act was not applicable to a "repeal" by a Rule, should not have gone further and commented on the distinction between an omission and the repeal. The observations regarding the distinction only were therefore held to be obiter dictum and departed from. 76. In any event, Kolhapur Cane Sugar Works Ltd (supra) clinches the issue. This decision of the Constitution Bench of the Hon'ble Supreme Court related to the applicability of Rules 10 and 10-A of the Central Excise Rules. Before the High Court, one of the contentions raised by the Appellants was that Rules 10 and 10-A had been deleted and a new Rule 10 had been introduced by a notification dated 6 August 1977. The effect of such deletion and introduction of a new provision was that the old Rules under which the show cause notice was issued ceased to exist; thereafter, further proceedings were without jurisdiction since the notification of 6 August 1977 did not contain any saving clause. It was also contended by the Appellant that Section 6 of the General Clauses Act did not apply because it does not apply to the repeal of statutory Rules and because it applies only where there is a repeal by a cen....
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....rred that the intention of the legislature is that the pending proceedings shall not continue but fresh proceedings for the same purpose may be initiated under the new provision. 38. In the present case, as noted earlier, Section 6 of the General Clauses Act has no application. There is no saving provision in favour of pending proceedings. Therefore action for realisation of the amount refunded can only be taken under the new provision in accordance with the terms thereof. 39. The further question that arises for consideration in this connection is whether Notification No. 267/77 dated 6-8-1977 by which Rule 10 was deleted contained any provision for continuance of the proceedings already initiated and whether Act 25 of 1978 which introduced Section 11-A of the Central Excise Act, adopted the legal device of creating a fiction by virtue of which proceedings under Rule 10 could be deemed to be proceedings under Section 11-A of the Act. If such was the position then it could be argued that the proceedings initiated when the old Rule 10 was in force could be continued on the strength of the clause of the notification by which the said Rule was omitted and substituted by a new Rule....
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.... legislation. Such an interpretation would run counter to the two Constitution Bench decisions of the Hon'ble Supreme Court. 82. Consequently, based upon the provisions of Section 6 of the General Clauses Act, 1897, the Respondents cannot assert that the show cause notices issued under the omitted or repealed Rules or the orders made in disposing of show cause notices after the Rules or the orders that had not attained finality are saved by virtue of the provisions of Section 6 of the General Clauses Act, 1897. SINCE THE 2024 RULES BY WHICH THE IMPUGNED RULES WERE OMITTED/REPEALED WERE MADE UNDER SECTION 164 OF THE CGST ACT, CAN THEY BE REGARDED AS 'CENTRAL ACT' FOR THE PURPOSES OF SECTION 6 OF THE GENERAL CLAUSES ACT? (FIFTH ISSUE) 83. As noted earlier, the expression 'Central Act' appearing in Section 6 of the General Clauses Act is defined under Section 3(7) of the General Clauses Act. There is no case made out to ignore this statutory definition or to elevate Rules framed under the Central Act to the status of a Central Act. There is a clear distinction between a Central Act and the Rules, which are subordinate legislation, that may be framed by exercising the powers conferr....
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....aken by the Constitution Bench in Kolhapur Cane Sugar Works Pvt Ltd (supra). Similarly, with respect, we believe that even the decision of the learned Single Judge of the Karnataka High Court in the case of Highpoint Hotels Pvt Ltd (supra) may not be consistent with the law laid down by the Constitution Bench in Kolhapur Cane Sugar Works Ltd (supra). 87. Besides, the main ground given by the learned Single Judge of Karnataka High Court for distinguishing the Constitution Bench's decision in the case of Rayala Corporation Pvt Ltd (supra) is that the said judgment related to offence and prosecution for alleged breach of Rule 132-A of the Defence of India Rules and the case before the learned Single Judge concerned compensation to the State for loss of revenue caused by short lifting of liquor quantity under Rule 14(2) of the Excise Rule, 1968. With respect, we do not agree that the ratio decidendi of the Constitution Bench decision in Rayala Corporation Pvt Ltd (supra) could have been brushed aside, based upon such a distinction. In our view, such a distinction was not quite relevant for brushing aside the ratio decidendi in the Constitution Bench's decision. 88. Similarly, the dec....
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....ll not, inter alia, affect pending proceedings. Thus, while Section 174(1) repeals the specified enactments, Section 174(2) saves the pending proceedings or any actions that might have been taken under the repealed enactments. This provision was necessary and enacted to ensure a smooth transition from the erstwhile regime to the GST regime. 92. Since particular emphasis was laid by the learned counsel for the Respondents on Section 174(3) of the CGST Act, we transcribe the same herein below for the convenience of reference. "The mention of the particular matters referred to in sub-sections (1) and (2) shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897 with regard to the effect of repeal." 93. Section 174(3) of the CGST Act appears to have been enacted as a matter of abundant caution. The provisions of Section 174 must be read and construed in their entirety. Section 174(1) repeals the Acts specified therein. Section 174(2) is a savings clause qua anything done under the Acts repealed by Section 174(1). Section 174(3), by making applicable the provisions of the General Clauses Act, which would include the provisions of ....
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.... the two Rules are omitted on 08 October 2024, the common law Rule that such Rules are completely obliterated or treated as never having been enacted will apply in the absence of any savings clause. To overcome such a drastic effect, the legislature enacted Section 6 of the General Clauses Act, 1897. Even the Law Commission's report, relied upon by Mr Adik, specifically states that Section 6 of the General Clauses Act, 1897, was enacted to make a departure from the common law Rule referred to above. 99. Therefore, unless the Respondents can establish that Section 6 of the General Clauses Act, 1897, applies or that there was any savings clause in the CGST Act or in the Notification, based merely on Clause 1(2) or the GST Council minutes, the pending proceedings that had not attained finality cannot be held as saved. The Clause relied upon is not a savings clause. It does not save pending proceedings. 100. Clause 1(2) does not prevent the lapsing of inconclusive proceedings or even orders that have not attained finality. Only transactions "past and closed" are not affected. This protection for "past and closed" transactions is not on account of Clause 1(2) now relied upon, but beca....
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....lows: - "(iii) There is a third variety of laying procedure, viz., laying with a negative procedure. This formula envisages that the legislature may annul the draft rules laid before it. Now a days, the laying formula occurs more frequently in the Central statutes and a standard formula has been evolved for this purpose. It runs as follows: Every rule made under this Act shall be laid, as soon as may be, after it is made before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or, annulment shall be without prejudice to the validity of anything previously done under that rule. The highlights of this formula are as follows: (i) This formula requires the rules to be laid before each House of Parliament a....
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....ng previously done under such Rules. 105. An Analysis of Section 166 would show that its first leg provides for laying of Rules, Regulations and Notifications before the Parliament for a total period of 30 days. The second leg of Section 166 provides for consequences where both houses agree in making any modification to the Rules, Regulations and Notifications so laid or agree that such Rules, Regulations and Notifications should not have been made. In such an eventuality, the laid Rules, Regulations and Notifications as the case may be, shall "thereafter" have effect only in such modified form or be of no effect, as the case may be, so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that Rule or Regulation or Notification, as the case may be. 106. Therefore, for the second leg of Section 166 to apply, the Rules, Regulations and Notifications must be either modified or annulled by the Parliament. Where no such modification or annulment is made, the second leg of Section 166, including the so-called savings clause therein, would not even apply. The so-called savings clause only saves the acts done under....
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....24 is neither backed by any savings clauses nor do the provisions of Section 6 of the General Clauses Act apply to such omission or repeal. Accordingly, in both these matters, the Petitioners were granted relief by way of quashing pending proceedings and orders that had not attained any finality because the challenges against them were pending before the authorities under the Act or the High Court. 112. Mr. Sridharan also relied upon Pasupuleti Venkateshwarlu Vs The Motor & General Traders AIR 1975 SC 1409 and Majati Subbarao Vs. P.V.K. Krishna Rao AIR 1989 SC 2187 in support of his contention that the Court is bound to take note of subsequent events. This was in the context of the omission of the impugned Rules vide Notification dated 08 October 2024 during the pendency of the show cause notice proceedings or the proceedings challenging the orders made, alleging non-compliance with the requirements of the impugned Rules. None of the Respondents even contested this principle. The learned counsel for the Respondents only contended that the omission was prospective and, in any event, the so-called savings clauses saved the pending proceedings or the orders that were impugned in thes....
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....ed explicit savings clauses. This indicates that the Central Government was aware of the legal obligation to include a savings clause where Section 6 of the General Clauses Act might not apply. Therefore, it appears that not including a savings clause in the Notification dated 08 October 2024, unlike the 64 Notifications mentioned above, was not an accident but a conscious choice, made to benefit export, import, and trade. 117. The argument about the impugned show-cause notices being issued under Section 73 of the CGST Act and such notices surviving because this section had not been omitted or repealed also cannot be accepted. The only allegation in the impugned show cause notices concerns the alleged violation of the requirements of the impugned rules. There are no other allegations, as was asserted by the learned counsel for the Petitioners and not disputed by the learned counsel for the respondents, though a specific opportunity was granted to them. Therefore, if the impugned rules are omitted or repealed without any savings clauses or the protection of Section 6 of the General Clauses Act, nothing would survive in such notices. Such notices cannot be saved based on the argumen....
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....hensive review of all the above aspects, we hold that, following the omission or repeal of the impugned Rules, i.e., Rules 89(4B) and 96(10) of the CGST Rules via Notification dated 08 October 2024, and in the absence of any saving clauses or the benefit of Section 6 of the General Clauses Act, all pending proceedings-such as undisposed show cause notices, orders disposing of show cause notices issued after 08 October 2024, or even orders made before 08 October 2024 but not yet finalised due to appeals before the Appellate Authorities or challenges before this Court, thus not constituting "transactions past and closed"-are not preserved and will stand lapsed. 123. Accordingly, we quash and set aside the impugned show cause notices and the impugned orders in original. Furthermore, we also quash and set aside the orders refusing some of the Petitioners' applications for refund, restore those applications to the files of the relevant Authorities, and direct the Authorities to consider and dispose of such refund applications in light of the declaration made by us above regarding the omission and repeal of the impugned Rules. This process must be completed within four months of the dat....