Facts of the Case: A batch of writ petitions was filed challenging the validity of Rule 89(4B) and Rule 96(10) of the CGST Rules, 2017. These rules placed restrictions on exporters in claiming refund of IGST paid on exports if they had availed certain duty-free benefits such as Advance Authorisation, EPCG, or EOU schemes.

The Petitioners contended that the impugned orders were ultra vires the CGST Act and unconstitutional. On 08.10.2024, the Central Government, through the CGST (Second Amendment) Rules, 2024, omitted Rules 89(4B) and 96(10) without introducing any savings clause.

Consequently, all pending proceedings (show cause notices, adjudication orders, and appeals) issued under these rules should automatically lapse, since omission without savings erases the rules as if they never existed.

The revenue contended that the omission n should not affect pending proceedings, as the principles of Section 6 of the General Clauses Act, 1897 applied. Rules made under Section 164 of the CGST Act should be treated as part of the parent Central Act, and therefore repeal/omission should attract the savings under Section 6 GCA. Alternatively, Section 174(3) of the CGST Act, which makes Section 6 GCA applicable to repeals, should be invoked to protect departmental proceedings.

Issue: Whether the constitutional validity of Rules 89(4B) and 96(10) needed examination after their omission? What is the effect of omission of these Rules without a savings clause — do pending proceedings survive or lapse? What is the scope of the doctrine of “transactions past and closed” in the context of repealed subordinate legislation

Held that: The Court held as under

1. Constitutional Validity – The Court held that it was not necessary to examine the vires of Rules 89(4B) and 96(10), since the petitions could be decided on the legal effect of their omission. Constitutional issues are not to be examined in the abstract when relief can be granted on narrower grounds.
2. Effect of Omission Without Savings – Rules 89(4B) and 96(10) were not merely procedural; they curtailed substantive rights of exporters. Once omitted without a savings clause, the Rules stood obliterated as if they never existed, except for “transactions past and closed.” Pending SCNs, adjudication proceedings, or appeals could not continue post 08.10.2024.
3. Applicability of Section 6 GCA – Section 6 GCA applies only to repeal of a Central Act or a Regulation, not to subordinate legislation like Rules. Constitution Bench rulings in Rayala Corporation Pvt Ltd v. Director of Enforcement and Kolhapur Cane Sugar Works Ltd v. Union of India squarely applied — Section 6 GCA does not save pending proceedings under repealed rules.
4. Status of Rules under Section 164 CGST Act – Rules framed under Section 164 are subordinate legislation. They cannot be treated as a “Central Act” merely because they were made under authority of the CGST Act. Therefore, omission of Rules cannot be treated as repeal of a Central Act to attract Section 6 GCA.
5. Section 174(3) CGST Act & Clause 1(2) of Notification – Section 174(3) applied only to repeals of the pre-GST laws specified in Section 174(1), not to omission of GST Rules. Clause 1(2) of the 2024 Notification (prospective effect from 08.10.2024) was not a savings clause. It merely fixed the effective date of omission.
6. Transactions Past and Closed – The Court held that only finalised adjudications are protected. SCNs not culminating in orders, or orders pending appeal/review, do not qualify as “past and closed.” Thus, all pending SCNs and non-final orders stood vitiated upon omission.

Accordingly, the Court set aside the impugned SCNs and orders-in-original in the petitions. Repeal or omission of subordinate legislation (rules) without a savings clause leads to automatic lapsing of pending proceedings, as Section 6 GCA does not apply. Only transactions past and closed are preserved.

This judgment is highly significant for exporters and Advance Authorisation holders facing refund/SCN disputes based on Rule 96(10).

Case Name: Hikal Limited, Yasho Industries Limited, Prashi Pharma Private Limited, M/s. Alkem Laboratories Ltd., Undercarriage and Tractor Parts Pvt Ltd., Nevatia Steel & Alloys Pvt. Ltd., Nikhil Nevatia, Augmont Enterprises Pvt. Ltd., Bharat Wire Ropes Limited, Murarilal Ramsukh Mittal, Kairav Chemofarbe Industries Limited, Kalp Overseas, Camlin Fine Sciences Limited, DD Cotton Pvt. Ltd., Mr. Mayank Arun Sekhsaria, Tridev Resins India Private Limited, Astec LifeSciences Limited, Versus Union of India, Central Board of Indirect Taxes and Customs Ministry of Finance, Office of the Commissioner, CGST and Central Excise, Navi Mumbai, The GST Council, Joint Commissioner (Adjudication), The Assistant Commissioner CGST & C. Ex. Division – I Belapur Commissionerate. Dated 11.09.2025

To read the complete judgment 2025 Taxo.online 2323