The Bombay High Court has dropped the demand for 1000s of crores in GST related adjudications.
The bench of Justice M.S. Sonak and Justice Jitendra Jain has observed 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.
Background
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.
The petitioners have made a categorical statement that the allegations in the impugned show cause notices, based upon which orders in original have been passed in some cases, the only allegation was about the non-compliance with the conditions prescribed either under Rule 89(4B) or 96(10) of the CGST Rules. There was no other allegation in the show cause notices or in the impugned orders in the original.
The court requested the department to verify the above statements. Except in one or two cases, which were de-tagged, the department was unable to dispute the statements made by the Petitioners or demonstrate that the show cause notices contained any allegations, besides non-compliance with Rule 89(4B) and 96(10) of the CGST Rules.
The issues involved in all these Petitions relate to the constitutional validity of the 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.
Conclusion
The Court quashed the show cause notices and the impugned orders in original. and set aside the orders refusing some of the Petitioners’ applications for refund, restore those applications to the files of the relevant Authorities, and directed the department to consider and dispose of refund applications in light of the declaration made regarding the omission and repeal of the impugned Rules. This process must be completed within four months of the date of this order’s upload, after providing the Petitioners with a fair opportunity to be heard.
Case Details
Case Title: Hikal Limited Versus UOI
Case No.: WP No. 78/2025
Date: 11 September 2025
Counsel For Petitioner: Senior Advocate V. Sridharan, Dr. Sujay Kantawala, Abhishek A. Rastogi, Stebin Mathew
Counsel For Respondent: Savita Ganoo
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