Repeal of GST Rule Without a Saving Clause Invalidates All Pending Proceedings.

Repeal of GST Rule Without a Saving Clause Invalidates All Pending Proceedings.

Issue

Can tax authorities continue with proceedings and enforce a demand raised under a specific rule (Rule 96(10) of the CGST Rules) after that rule has been repealed by the legislature without a “saving clause” to protect ongoing actions?

Facts

• The petitioner was issued a Show Cause Notice (SCN) on August 2, 2024, and a subsequent Order-in-Original (OIO) on February 3, 2025.
• Both the SCN and the OIO were based on the provisions of Rule 96(10) of the CGST Rules.
• In a crucial intervening development, Rule 96(10) was repealed on October 8, 2024.
• The repeal was done without a saving clause, which is a specific legal provision that would normally allow pending proceedings to continue as if the old law were still in force.
• The petitioner challenged the validity of the entire proceeding, arguing that its legal foundation had been removed by the repeal.

Decision

• The High Court quashed both the Show Cause Notice and the Order-in-Original.
• It held that the continuation of the proceedings was legally unsustainable.
• The court followed a binding precedent in the case of Hikal Ltd. v. UOI, which established that when a law is repealed without a saving clause, all proceedings initiated under that law immediately lapse, unless they are “past and closed” (i.e., fully concluded).
• Since the proceedings against the petitioner were still ongoing at the time of the repeal, their legal basis was extinguished.
• The court rejected the argument that the petitioner should have used an alternative remedy (like an appeal), stating it would be futile as the issue was a pure question of law already settled by a higher court.

Key Takeaways

• No Law, No Action: The repeal of a legal provision without a saving clause effectively erases that provision from the statute book for all pending matters. Authorities cannot continue to enforce a law that no longer exists.
• The Importance of a “Saving Clause”: This case highlights the critical function of a saving clause in legislation. Its absence signifies a clear legislative intent to terminate all ongoing actions under the repealed provision.
• “Past and Closed” Doctrine: The only proceedings that survive such a repeal are those that are already complete and where rights have been finalized. Any case that is still in the notice, adjudication, or appeal stage will lapse.
• Writ Jurisdiction for Pure Legal Issues: When a proceeding is challenged on a fundamental point of law that is already settled by a binding precedent, a High Court can intervene through a writ petition, as forcing the petitioner through the standard appeal process would be a pointless exercise.