Bombay High Court Quashes GST Show Cause Notices Following Rule Omission

All Pending GST Proceedings Under Repealed CGST Rules 89(4B) and 96(10) Declared Lapsed

In a landmark decision, the Bombay High Court, on September 11, 2025, quashed all pending proceedings and show cause notices issued under the now-omitted Rules 89(4B) and 96(10) of the Central Goods and Services Tax (CGST) Rules, 2017. This ruling comes in response to a batch of petitions led by Hikal Limited, challenging the constitutional validity of these CGST Rules. The petitioners argued that the omission of these rules via a notification dated October 8, 2024, lacked a savings clause, leading to all pending proceedings under these rules lapsing.

The court, comprising Justices M.S. Sonak and Jitendra Jain, determined that the notification omitting these rules was not backed by any protection under Section 6 of the General Clauses Act, 1897, which typically provides continuity for pending proceedings upon the repeal of a law. The court found that the omission or repeal of the rules without a savings clause rendered all related pending proceedings and show cause notices as null and void, unless they qualified as "transactions past and closed."

This decision aligns with earlier rulings from the Kerala and Uttarakhand High Courts that declared Rule 96(10) of the CGST Rules unconstitutional. The Bombay High Court's judgment reflects the principle that when rules are repealed without a savings clause, they are obliterated from the statute book as if they never existed, thus invalidating any pending proceedings under those rules.

Consequently, the High Court directed the authorities to reconsider the refund applications rejected due to the alleged violation of these repealed rules. The authorities must process these applications within four months, ensuring a fair hearing for the petitioners.

The respondents' request for a stay on the judgment was rejected, as the court emphasized that any stay would effectively revive the lapsed orders, which is untenable.

Bottom Line:

The omission or repeal of Rules 89(4B) and 96(10) of the CGST Rules, 2017, via Notification dated 08 October 2024, without any savings clause or application of Section 6 of the General Clauses Act, renders all pending proceedings under these rules, including show cause notices and orders, lapsed. 

Statutory provision(s): Central Goods and Services Tax Rules, 2017, Section 6 of the General Clauses Act, 1897, Section 166 and Section 174 of the CGST Act, 2017.

Hikal Limited v. Union of India, (Bombay)(DB) : Law Finder Doc Id # 2777302