GST Proceedings Under Omitted Rule 96(10) Cannot Continue Without Saving Clause: Allahabad HC

Complete Surveying Technologies Vs State of U.P. and 2 Others (Allahabad High Court)

Summary: The Allahabad High Court set aside the adjudication and appellate orders challenged by a GST-registered company engaged in the manufacture, supply and export of serving equipment and accessories, with two factories at Noida. The proceedings concerned Financial Years 2019-20 to 2023-24 and culminated in an order dated 31 December 2024 under Section 74 of the UPGST/CGST Act, 2017, relying on Rule 96(10) of the CGST Rules, 2017. The petitioner’s appeals concerning Financial Years 2022-23 and 2023-24 were dismissed on 5 May 2026. Before the High Court, the petitioner argued that the impugned orders could not survive after the omission of Rule 96(10), particularly in view of the Supreme Court’s decision in Goodluck India Limited v. Union of India and the Allahabad High Court’s decision in Saran Impex. The State’s counsel did not dispute the legal proposition.

The Court reproduced the ruling in Saran Impex, which applied the Supreme Court’s decision affirming the Gujarat High Court’s judgment in Addwrap Packaging Pvt. Ltd. v. Union of India. Rule 96(10) had been omitted through Notification No. 20/2024-Central Tax dated 8 October 2024 without a saving or sunset clause. Relying on the Constitution Bench decision in Kolhapur Canesugar Works Ltd. v. Union of India, the Supreme Court explained that proceedings under an omitted rule could continue only if an express provision or statutory legal device preserved them. The recommendation that the omission operate prospectively was advisory and did not bind the rule-making authority. The omission therefore applied to pending proceedings; the restriction could not be kept alive merely because the dispute related to an earlier tax period.

The High Court also reproduced CBIC’s Office Memorandum dated 24 August 2026 accepting the Supreme Court’s judgment. The memorandum explained that Section 6 of the General Clauses Act, 1897 did not preserve proceedings under an omitted rule and noted the absence of a corresponding saving provision under GST law. In these circumstances, the Court held that the proceedings stood vitiated. It disposed of the writ petition and set aside the impugned orders, while expressly leaving it open to the respondents to take appropriate measures as warranted. The operative order did not itself direct payment of any quantified refund or determine a separate refund entitlement.

Cases Discussed

• Saran Impex and another v. State of U.P. and another, Writ Tax No. 5267 of 2025 and connected matters (Allahabad High Court). Followed for the conclusion that proceedings founded on omitted Rule 96(10), covered by the Supreme Court’s ruling, could not survive.
• Goodluck India Limited & Anr. v. Union of India & Ors., 2026 (189) taxmann.com 330 (SC); 2026 (8) TMI 719, SLP (Civil) No. 24550 of 2025 and connected matters, judgment dated 6 August 2026 (Supreme Court). Applied for the effect of omitting Rule 96(10) without a saving clause on pending proceedings.
• Addwrap Packaging Pvt. Ltd. v. Union of India, (2025) 31 CENTAX 274 (Gujarat High Court). The judgment concerning the application of the omission to pending proceedings was affirmed by the Supreme Court.
• Kolhapur Canesugar Works Ltd. v. Union of India, (2000) 2 SCC 536 (Supreme Court, Constitution Bench). Relied upon in the reproduced Supreme Court reasoning for the requirement of an express saving provision or legal device to continue proceedings under an omitted rule.

FULL TEXT OF THE JUDGMENT/ORDER OF ALLAHABAD HIGH COURT

1. Heard Sri Tanmay Sadh, learned counsel for the writ petitioner as well as Sri Shashikant Mishra, learned Standing Counsel for the State.

2. The case of the writ petitioner is that it happens to be a Private Limited Company which is engaged in the manufacture, supply and export of premier serving equipment’s and accessories and is registered under the provisions of GST Act and is having GST Registration No. 09AAACC4277E1ZR. The petitioner has two factories, both at Noida. However, proceedings stood initiated with issuance of a show cause notice and thereafter an order came to be passed on 31.12.2024 by the second respondent, Deputy Commissioner, UPGST, Noida-14, Gautam Budh Nagar under Section 74 of the UPGST/CGST Act, 2017 relatable to the Financial Years 2019-20, 2020-21, 2021-22, 2022-23, 2023-24 under Section 74 of the Act relying and referring to the Rule 96(10) of the CGST Rules, 2017. The said orders were subject matter of challenge at the instance of the petitioner before the Additional Commissioner Grade-II (Appeal), State Tax Department, Noida, Gautam Budh Nagar for the financial years 2022-23 and 2023-24 and the appeal came to be dismissed on 05.05.2026

3. Questioning both the orders, the present writ petition has been preferred.

4. Learned counsel for the petitioner has sought to argue that the orders impugned in the present proceedings cannot be sustained even for a single moment for the simple reason that now with the omission of sub-rule (10) of Rule 96 of the CGST Rules, 2017, no proceedings can be initiated in the garb and the guise of the same. Reliance has been placed upon a judgment of this Court in Writ Tax No. 5267 of 2025 (Saran Impex and another Vs. State of U.P. and another) which in turn relies upon the judgment of the Hon’ble Apex Court in Good Luck India Limited Vs. Union of India 2026 (189) taxmann.com 330 (SC), affirming the order of the Gujarat High Court in Addwrap Packaging Pvt. Ltd. Vs. Union of India (2025) 31 CENTAX 274 (Guj.). Further submission is that even now in compliance of the order of the Hon’ble Apex Court, a Circular came to be issued by the Central Board of Indirect Taxes and Customs, on 24.08.2026. Thus, it is prayed that the orders impugned be set aside.

5. Sri Shashikant Mishra, learned Standing Counsel who appears for the State, could not dispute the said legal proposition. According to him, the writ petition has made an iron-cast case.

6. Having heard the submissions made across the bar and perused the record.

7. The only question which arises for determination is as to whether the orders impugned are sustainable in the eyes of law in the wake of the judgment of Hon’ble Apex Court and in the wake of the omission from the statute of sub-rule (10) of Rule 96 of the CGST Rules, 2017. In Saran Impex and another (supra), a Division Bench of this Court, held as under:- “1. Heard Sri Nishant Mishra alongwith Ms. Vedika Nath, Ms. Yashika Singh, Sri Dhruv Pratap Singh holding brief of Sri Tanmay Sadh, Sri Namit Kumar Sharma, Sri Yashonidhi Shukla learned counsel for the petitioners, Sri Dhananjay Awasthi, Sri Gaurav Mahajan, Sri Parv Agarwal, Sri Amit Mahajan and Sri Krishna Agarwal learned counsel for CBIC.

2. Present set of petitions has been filed, primarily to assail proceedings initiated under Section 73 and 74 of the CGST Act, 2017 – on the strength of Rule 96(10) of the CGST Rules 2017 (hereinafter referred to as ‘the Rules’), for various tax periods. Those details are contained in the table below:

3. The common grounds pressed in the writ petitions being that the Rule 96(10) of the Rules was omitted by the Central Government vide Notification No. 20/2024-Central Tax, dated 08.10.2024 with effect from 08.10.2024.

4. To the extent the impugned proceedings had not been concluded upto the date of omission of Rule 96(10) of the Rules, same do not have legs to stand. Reliance has been placed on a decision of the Supreme Court in Goodluck India Ltd. vs. Union of India (2026) 189 Taxmann.com 330 (SC). By that order, the Supreme Court has affirmed the order of the Gujarat High Court in Addwrap packaging Pvt. Ltd. vs. Union of India (2025) 31 Centax 274 (Guj.). In relevant parts, the issue involved in Goodluck India Ltd. (supra) has been noticed as below:

“3. The issue arising is whether sub-rule (10) of Rule 96 as omitted by Notification No.20/2024 with effect from 08.10.2024 would inure to the benefit of the assessee in the pending proceedings, wherein there was a claim of refund of integrated tax paid on goods and services exported out of India, to be considered without the restriction under sub-rule (10) being applied. The sub-rule having been omitted, suffice it to notice that the applicability of refund under Rule 96 was without the rigor of the person claiming such refund, having received supplies after availing benefits available by virtue of the notifications specified in clause (a) or the benefits available under the notifications specified under clause (b). The sub-rule having been omitted without a saving clause it applies squarely to all the proceedings pending, is the contention of the assessees, which was sought to be resisted by the learned Additional Solicitor General appearing for the Union of India.” (emphasis supplied)

5. As to reasoning, the Supreme Court has relied on its earlier Constitution Bench decision in Kolhapur Canesugar Works Ltd. Vs Union of India (2000) 2 SCC 536 and thereafter observed as below:

“6. It was held by the Constitution Bench that if on omission of a rule, there was a provision for continuance of the proceedings already initiated or if by incorporation of a provision in the statute there was a legal device adopted, creating a fiction by virtue of which proceedings under the omitted rule could be continued; only then proceedings initiated under the omitted rule could be continued.

7. The Constitution Bench decision applies squarely in the above case. We may also observe that even going by the recommendations as extracted hereinabove, sub-rule (10) of Rule 96 was omitted because it was ‘leading to unnecessary complications without any intended benefit being served’ (sic). As fairly submitted by the learned ASG the legislature has not brought in any saving clause or a sunset clause, when sub-rule (10) of Rule 96 was omitted. The recommendation that the omission should be prospective is also advisory in nature and does not bind the rule making authority. The intention to omit the rule without any saving clause was to bring to an end, the unnecessary complications once and for all and the intention cannot be to keep alive the unnecessary complications insofar as the pending proceedings are concerned.

8. We find no good reason to interfere with the well-reasoned judgment of the High Court. We are told that there are many proceedings pending before the various High Courts and conflicting decisions have also been passed. We hope that such proceedings would get closure with this judgment.”

6. It is also admitted to the revenue that the order of the Supreme Court has been given full effect by issuance of Office Memorandum dated 24.08.2026, by the CBIC.

7. To the extent the issue involved is squarely covered by the decision of the Supreme Court in Goodluck India Ltd. (supra), no lis survives for any other adjudication. Accordingly, all writ petitions are allowed. The individual adjudication notices and orders are quashed. No order as to costs.”

8. Further, there happens to be a Circular of the Central Board of Indirect Taxes and Customs dated 24.08.2026, which also reads as under:-

“F. No. CBIC-20010/21/2026-GST

Government of India
Ministry of Finance
(Department of Revenue)
Central Board of Indirect Taxes & Customs
GST Policy Wing

Room No. 16049
Kartavya Bhawan-01, New Delhi
Dated: 24-08-2026

OFFICE MEMORANDUM

Subject: Hon’ble Supreme Court judgment dated 06.08.2026 in the matter of M/s Goodluck India Limited & Anr. v. Union of India & Ors. in respect of prospective omission of rule 96(10) of the CGST Rules, 2017 – reg.

The undersigned is directed to refer to the email received from the Legal Cell, CBIC, dated 19.08.2026, requesting the examination of the judgment dated 06.08.2026 passed by the Hon’ble Supreme Court in Special Leave Petition (Civil) No. 24550 of 2025, in the matter of M/s Goodluck India Limited & Anr. v. Union of India & Ors., [2026 (8) TMI 719 – Supreme Court] along with other connected matters, in which it has been held that in the absence of any saving clause accompanying the omission of rule 96(10) of the CGST Rules, 2017, the said omission applies to all proceedings pending as on the date of omission.

1.2. The Hon’ble Court has further observed that sub-rule (10) of rule 96 was omitted as it was “leading to unnecessary complications without any intended benefit being served,” and that the recommendation for the omission to be prospective is advisory in nature and does not bind the rule-making authority. Accordingly, the restrictions contained in rule 96(10) cannot be applied to pending proceedings arising out of the omission of the said rule.

1.3. It is noted that the Hon’ble Supreme Court has relied upon the Constitution Bench judgment in Kolhapur Canesugar Works Ltd. v. Union of India (2000) 2 SCC 536 = 2000 (2) TMI 823 – Supreme Court, wherein it was held that section 6 of the General Clauses Act, 1897 does not apply to the omission of a rule. The Hon’ble Court reiterated that, where a rule is omitted, pending proceedings can continue only where there is an express provision for their continuance, or a legal device has been incorporated in the statute/rules to preserve such proceedings. Similar opinion was also given by the Ld. Additional Solicitor General in an earlier reference on the matter.

2. It is also pertinent to note that following the judgement of the Hon’ble Supreme Court in Kolhapur Canesugar Works Ltd., saving clauses were incorporated in the Central Excise Act, 1944 and the Customs Act, 1962, by insertion of section 38A with retrospective effect from 28.02.1944, and section 159A with retrospective effect from 01.02.1963, respectively, vide the Finance Act, 2001. This was done in order to prevent any amendments or omissions in rules, regulations etc. from extinguishing any existing rights or ongoing legal cases. In the absence of such a clause in respect of the GST law, omission of a rule in essence takes retrospective effect.

3. Thus, in view of the judgment of the Hon’ble Supreme Court and the discussion above, this office is of the view that the judgment dated 06.08.2026 in the matter of M/s Goodluck India Limited & Anr. v. Union of India & Ors. [2026 (8) TMI 719 – Supreme Court] may be accepted.

4. This issues with the approval of Member (GST), CBIC.
(Kriti Pandey)
Under Secretary, GST Policy Wing”

9. In view of the aforesaid factual position, the irresistible conclusion stands drawn that the proceedings stand vitiated. Accordingly, the writ petition stands disposed of, the orders impugned are set aside, leaving it open to the respondents to take appropriate measures as warranted and occasioned in that regard.