Does Prospective Omission of GST Rule Require a Saving Clause?

Summary: The Supreme Court in M/s Goodluck India Limited & Anr. v. Union of India & Ors., by order dated 06.08.2026, held that the omission of Rule 96(10) of the CGST Rules, 2017 by Notification No. 20/2024-Central Tax without a saving clause applies to pending proceedings, relying on the Constitution Bench decision in Kolhapur Canesugar Works Ltd. v. Union of India. This article respectfully questions the application of that principle to a rule expressly omitted prospectively from 08.10.2024. The author argues that a distinction should be drawn between an omission that operates as complete obliteration and a prospective omission that expressly acknowledges the rule’s operative existence until a specified date. The analysis examines the significance of Section 166 of the CGST Act, Sections 38 and 38A of the Central Excise Act, 1944, the parliamentary laying mechanism and the absence of a Section 38A equivalent in the CGST Act. The author submits that where an omitting notification itself specifies a prospective date, proceedings validly initiated during the acknowledged operative life of the rule should not require an independent saving clause merely to preserve their existence. The article therefore calls for reconsideration of the implications of Goodluck India for future prospective omissions of delegated legislation.

Introdcution

Hon’ble Supreme Court of India, by its order dated 06.08.2026 in M/s Goodluck India Limited & Anr. v. Union of India & Ors. [ SLP(C) No. 24550 of 2025], held that the omission of Rule 96(10) of the CGST Rules, 2017 by Notification No. 20/2024-Central Tax with effect from 08.10.2024 — effected without a saving clause — obliterates the sub-rule as if it had never existed, thereby benefiting even pending proceedings irrespective of when they were initiated. The Court placed heavy reliance on the Constitution Bench decision in Kolhapur Canesugar Works Ltd. v. Union of India.

With the greatest respect to the Hon’ble Court, the author submits that the mechanical application of Kolhapur to Goodluck India involves a critical jurisprudential elision. The distinction lies in the temporal character of the provision being omitted: whether it was omitted ab initio — as though it had never been made — or whether it was a provision that had come into legal force from a specified date, was duly laid before Parliament and remained before it for the full thirty-day period without modification or annulment, and was thereafter prospectively omitted by a notification which was itself similarly laid before Parliament. Where Parliament has, at both stages, been afforded the opportunity to intervene and has chosen not to, its approval of the rule’s operative period is a constitutional fact of the highest order — one which the Kolhapur principle, developed on materially different facts, did not account for, and which the Goodluck India Court did not examine. The consequences of these two modes of omission are fundamentally different, and no saving clause is required to preserve proceedings initiated during a rule’s acknowledged operative period.

Background

Rule 96(10), as it stood, disentitled a person who had received supplies at concessional or exemption rates from claiming an IGST refund under Rule 96. It was inserted by Notification No. 3/2018-Central Tax dated 23.01.2018 and had a defined operative life. It was omitted by Notification No. 20/2024-Central Tax dated 08.10.2024, prospectively, without a saving clause.

The Court in Goodluck India held that since no saving clause accompanied the omission, all pending proceedings — whether show cause notices, adjudication orders, or appeals — stood to benefit as though the restriction had never existed. The Department’s submission that the omission should operate only prospectively, consistent with the advisory recommendation of the 54th GST Council meeting (09.09.2024), was rejected on the ground that GST Council recommendations do not bind the rule-making authority.

III. The Precise Ratio of Kolhapur Canesugar

The Constitution Bench in Kolhapur dealt with Rules 10 and 10A of the Central Excise Rules, 1944, omitted by Notification No. 267/77 dated 06.08.1977 and simultaneously substituted by a new Rule 10 on the same date. A show cause notice issued before the omission was adjudicated by an order passed after it. The question was whether that post-omission order could be sustained.

The Bench held that Section 6 of the General Clauses Act, 1897 — which saves pending proceedings on repeal of an enactment — does not apply to the omission of a rule, because Section 6 by its terms covers only the repeal of a Central Act or Regulation, not a rule. In the absence of Section 6 and of any saving clause, all pending proceedings lapsed.

Para 20 of the judgment in the case of Firm A.T.B. Mehtab Majid and Co. (supra) is worth quoting here;

“It has been urged for the respondent that if the impugned rule be held to be invalid, old Rule 16 gets revived and that the tax assessed on the petitioner will be good. We do not agree. Once the old rule has been substituted by the new rule, it ceases to exist and it does not automatically get revived when the new rule is held to be invalid.”

Here, it should not be lost sight of the fact that Rules 10/10A were machinery provisions ancillary to the substantive recovery provision contained in Section 11A, these Rules were substituted unlike Rule 96(10) was a condition/restriction governing entitlement to the benefit of refund of accumulated ITC under the zero-rated supply framework, that continued prior to the date its omission.

A prospective omission says, in substance: “the rule existed and had effect until this date; from this date it ceases to exist.” It does not say: “the rule never existed.” To treat a prospective omission as retroactive obliteration is to distort both the language and the logic of the notification.

The Distinction Goodluck India Did Not Examine

The Legal Significance of the Prospective Date of Omission

The rule-making power under Section 164 of the CGST Act, 2017 is not absolute. Every rule made under the Act must be laid before Parliament under Section 166, and the standard notification language — “shall come into force from the date of publication” or “with effect from [a specified date]” — is not mere administrative form. It defines the temporal boundary of the rule’s legal existence.

Notification No. 20/2024 omitted Rule 96(10) “with effect from 08.10.2024.” By specifying a date, the notification itself acknowledged that the rule had a valid operative life until that date. The rule-making authority cannot in one breath concede that the rule operated until 08.10.2024 and in the next deny that anything done under it during that period has legal validity. To hold otherwise is to read the two notifications — one inserting the rule from 23.01.2018, one omitting it from 08.10.2024 — as mutually contradictory. That cannot be correct in law.

No Saving Clause Is Needed Where the Omission Itself Precludes Obliteration

A saving clause saves proceedings from obliteration. It is not needed where the very terms of the omission preclude obliteration. The Kolhapur ratio — that the absence of a saving clause results in obliteration — rests on the premise that the omission, unless saved, wipes the rule from the statute book as if it had never existed. But that premise holds only where the omission is, in substance, contemporaneous with substitution and carries no acknowledgment of any prior operative period. It does not hold where the omitting authority has itself specified a prospective date, thereby conceding the rule’s operative existence until that date.

Proceedings initiated during the acknowledged operative life of a rule rest on the rule as it then validly stood. A prospective omission closes the rule to new proceedings from the date of omission; it does not, and cannot, reach back to unsettle proceedings already validly initiated. No express saving clause is needed to say what the prospective language of the omitting notification already implies.

The Statutory Landscape: Section 38 and 38A of the CE Act, and Section 166 of the CGST Act

What Section 38(2) of the CE Act Contained — and Why It Did Not Assist in Kolhapur

Section 38(2) of the Central Excise Act, 1944 — the laying provision — already carried a saving limb: “any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or notification or order.” This provision existed in 1977 when Rules 10 and 10A were omitted, and in 2000 when Kolhapur was decided. The Hon’ble Court noted that the omission of Rules 10 and 10A in 1977 was an executive act by notification, not a parliamentary annulment. Thus, Section 38(2)’s saving limb therefore did not engage on the facts of Kolhapur.

Section 38A: Parliament’s Legislative Answer to Kolhapur

The gap exposed by Kolhapur — absence of any provision saving pending proceedings against executive omission of a rule by notification — was filled by Parliament within a year of that decision. By the Finance Act, 2001 (Act 14 of 2001, s. 131), Section 38A was inserted into the CE Act with retrospective effect from 28.02.1944. Section 38A, in terms mirroring Section 6 of the General Clauses Act, expressly provides that amendment, repeal, supersession or rescinding of a rule shall not affect pending investigations, legal proceedings or remedies — unless a different intention appears. It is Parliament’s direct legislative response to the lacuna Kolhapur exposed, and it confirms that the policy underlying Section 6 applies equally to rules, once Parliament so declares.

The CGST Act: Section 166 Without a Section 38A Equivalent

The CGST Act, 2017 contains Section 166 — the functional equivalent of Section 38(2) of the CE Act: the laying provision whose saving limb protects “anything previously done” under a rule against parliamentary modification or annulment. But the CGST Act contains no equivalent of Section 38A. There is no provision in the CGST Act that expressly saves pending investigations, legal proceedings or remedies against the rule-making authority’s own executive omission of a rule by notification.

In this respect, the CGST Act stands where the CE Act stood before 2001: Section 166’s saving is confined to parliamentary annulment and does not extend to executive omission. The Goodluck India Court was therefore formally correct that no statutory equivalent of Section 38A exists in the CGST framework, and that the absence of a saving clause in Notification No. 20/2024 cannot be cured by Section 166 alone.

However — and this is the central submission — the absence of a Section 38A equivalent does not determine the question. Section 38A and Section 38(2) address the consequences of omission in the abstract. The prospective character of Notification No. 20/2024 addresses the specific omission before the Court, and its language defeats the very premise on which the Kolhapur obliteration principal rests. The question is not merely whether a statutory provision expressly saves the proceedings, but whether a prospective omission — one that by its own terms acknowledges the rule’s operative existence — can be treated as retroactive obliteration at all. The answer is that it cannot.

The Comparison

Conclusion

In summary, the author respectfully submits that the law as settled in Goodluck India calls for reconsideration, on the following propositions:

First, the Kolhapur ratio — that omission of a rule without a saving clause obliterates it as if it had never existed — applies only where the omission carries no acknowledgment of any prior operative period. In Kolhapur, the old rules were replaced in the same moment they were omitted; there was no conceded operative life. In Goodluck India, the omission was prospective from a specified future date, which by its own terms conceded that the rule had validly operated until that date. These are jurisprudentially different situations.

Second, Parliament itself recognised the gap exposed by Kolhapur and addressed it in the CE Act by inserting Section 38A in 2001 — expressly saving pending proceedings against executive omission of rules. The CGST Act has no such equivalent. But that absence does not resolve the anterior question: whether a prospective omission — one that by its own terms acknowledges the rule’s operative existence — can be treated as retroactive obliteration at all. The author submits it cannot, regardless of whether Section 38A or its equivalent is present.

Third, the standard notification phrase specifying a prospective date of omission is not administrative boilerplate. It is the language by which the rule-making authority defines the temporal boundary of the rule’s operation, and thereby concedes the legal validity of everything done during that period. A saving clause is needed to rescue proceedings from obliteration; it is not needed to save what the omitting authority’s own language has already acknowledged.

In parting, the author does not question the equity that animated Goodluck India — Rule 96(10) was acknowledged even by the Law Committee as having caused “unnecessary complications without any intended benefit.” But the path taken risks establishing a precedent under which the rule-making authority’s failure to include a saving clause in any omitting notification will extinguish revenue proceedings however well-founded, and however clearly the omitting notification itself was intended to operate only prospectively. That is a result which neither the law nor sound policy should countenance.

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The views expressed are personal

Indravijaysinh Solanki , Superintendent of Central Tax, Presenlty posted at the CCO, Vadodara zone , Vadodara.