The Himachal Pradesh High Court has quashed a GST show cause notice issued under Rule 89(4B) of the Central Goods and Services Tax Rules, 2017, holding that the provision had already been omitted without a saving clause when the notice was issued.
The Bench of Justice Ajay Mohan Goel and Justice Romesh Verma allowed the petition challenging a show cause notice dated December 2, 2025. The Court found that the notice lacked statutory backing because the rule had been omitted through a notification dated October 8, 2024.
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The company approached the High Court seeking the quashing of the December 2025 show cause notice. It also sought a declaration that Rule 89(4B) was illegal and unconstitutional.
Its principal objection was that the authorities had invoked a provision that no longer existed in the CGST Rules when the notice was issued. The petitioner submitted that the October 8, 2024 notification had omitted the rule without incorporating any saving clause.
A saving clause preserves specified rights, liabilities or proceedings despite the removal of a statutory provision. Its absence was central to the company’s challenge.
Relying on the Supreme Court’s judgment in Goodluck India Limited, arising from Special Leave Petition (Civil) No. 24550 of 2025 and a connected matter, the petitioner argued that the notice was invalid from its inception.
The Deputy Solicitor General of India submitted that the process leading to the issuance of the impugned notice had been initiated and completed before the statutory rule was omitted.
However, the department could not establish that the rule remained in force on the date the show cause notice was actually issued.
The issue before the Court was therefore whether the earlier departmental process could sustain a subsequent notice founded on a provision that had already been removed without any saving clause.
The High Court reproduced relevant passages from the Supreme Court’s decision in Goodluck India Limited. Those passages discussed the omission of Rule 96(10) and the GST Council’s recommendation concerning Rules 96(10), 89(4A) and 89(4B).
As recorded in the reproduced passages, the Law Committee had observed that Rule 96(10) was causing unnecessary complications without serving any intended benefit. It recommended that the provisions be omitted with prospective effect.
The Supreme Court explained that the Council’s recommendation was advisory and did not bind the rule-making authority. The absence of a saving or sunset clause in the actual omission was material to deciding whether proceedings could continue.
The Supreme Court relied on the Constitution Bench judgment in Kolhapur Canesugar Works Ltd. v. Union of India, (2000) 2 SCC 536, which concerned proceedings under omitted Central Excise Rules.
The principle discussed was that proceedings under an omitted rule could continue only where a provision preserved them or another statutory mechanism enabled their continuation.
The passages reproduced by the High Court also explained that Section 6 of the General Clauses Act did not apply to the omission of a rule in the circumstances considered in Kolhapur Canesugar Works.
Applying the Supreme Court’s reasoning, the High Court held that Rule 89(4B) had indeed been omitted through the October 8, 2024 notification without any saving clause.
Since the impugned notice was issued on December 2, 2025, the authority could not derive statutory backing from the omitted provision.
The Bench held that the notice was “non-est in the eyes of law as it was issued by the authority without any statutory backing to issue the same.”
Accordingly, the Court allowed the writ petition and quashed the show cause notice, directing that the consequences follow. Pending miscellaneous applications were also disposed of. No order as to costs was passed.
The decisive consideration was the authority’s legal power to issue the notice after omission of the rule. The department’s reliance on a process undertaken before omission did not sustain the notice issued subsequently.
Although the petitioner had also challenged the constitutional validity of Rule 89(4B), the Court resolved the case by quashing the notice for want of statutory backing. The operative decision does not separately declare the rule unconstitutional.
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