Greenlam Industries Limited Vs Union of India (Himachal Pradesh High Court)
Himachal Pradesh High Court: Rule 96(10) Notices Fail After Omission Without Saving Clause
Executive summary
- SCNs issued in July 2025 under omitted Rule 96(10)were quashed as non-est.
- The omission of Rule 96(10), without a saving clause, applies to pending proceedings.
- The High Court followed the Supreme Court’s binding ruling in Goodluck India.
- Exporters facing pending Rule 96(10) refund proceedings should seek immediate closure.
1. The Issue
The assessee received three Form GST DRC-01 notices dated 25 July 2025 invoking Rule 96(10) of the CGST Rules, 2017. The notices sought to deny refund of IGST paid on exports on the ground that benefits under specified customs and GST notifications had been availed.
By that date, however, Rule 96(10) had been omitted through Notification No. 20/2024-Central Tax dated 8 October 2024, without an express saving or sunset clause.
The question was whether a post-omission SCN could survive merely because the transactions or refund claims related to a period when Rule 96(10) existed.
2. Department’s Arguments
The judgment records that the Revenue could not dispute the relevant facts: Rule 96(10) had been omitted without a saving clause, and the impugned notices were issued after the omission.
The Department’s broader position, reflected in the litigation leading to the Supreme Court’s decision in M/s Goodluck India Limited v. Union of India, was that the GST Council had contemplated prospective operation of the omission. Therefore, proceedings involving earlier export periods should continue under the erstwhile rule.
That argument rested on the 54th GST Council recommendation, which had proposed prospective omission of Rule 96(10), Rule 89(4A) and Rule 89(4B).
3. Assessee’s Arguments
The assessee submitted that a notice founded upon a non-existent rule was void from inception. It relied on the Supreme Court’s 6 August 2026 decision in Goodluck India, which held that omission of Rule 96(10), without a saving clause, applied to pending proceedings as well.
The assessee also placed Circular No. 264/10/2026-GST before the Court. The Circular clarified that, following Goodluck India, omission of Rule 96(10) would operate retrospectively from 23 October 2017 and that pending proceedings must be dealt with accordingly.
4. Holding and Reasoning
The High Court allowed the writ petition and quashed the three SCNs.
Its ratio is direct: as Rule 96(10) had already been omitted without a saving clause, the Department had no statutory backing to issue notices under that rule in July 2025. The SCNs were therefore “non-est in the eyes of law” (paragraph 8). indiankanoon.org
The Court did not independently reconsider the validity or policy of Rule 96(10). That question had become academic after the Supreme Court’s ruling in Goodluck India. The High Court applied the binding position that a rule omitted without a saving clause cannot sustain pending proceedings.
The Court also treated the GST Council’s recommendation of prospective operation as advisory, not legally determinative. What governed was the actual rule-making action: Notification No. 20/2024-Central Tax omitted Rule 96(10), and did not preserve past or pending actions.
This distinction matters. A Council recommendation may explain policy context, but it cannot supply a saving clause that the delegated legislation itself does not contain.
5. Then and Now: The Pre-GST Lineage
The controlling pre-GST decision is the Constitution Bench ruling in Kolhapur Canesugar Works Ltd. v. Union of India, (2000) 2 SCC 536; 2000 (119) E.L.T. 257 (S.C.).
There, Central Excise proceedings had been initiated under Rules 10 and 10A of the Central Excise Rules, 1944. Before completion, the rules were omitted. The Supreme Court held that Section 6 of the General Clauses Act, 1897 did not save proceedings under an omitted rule because that provision applies to repeal of a Central Act or Regulation, not omission of a rule. In the absence of an express saving provision or a statutory legal fiction, the proceedings lapsed. indiankanoon.org
Goodluck India applied that principle to GST Rule 96(10). The Supreme Court noted that Rule 96(10) had been omitted because it created complications without intended benefit, and that the rule-maker did not insert a saving clause. The result is not merely prospective relief: pending proceedings founded on the omitted restriction cannot continue. indiankanoon.org
GST has therefore continued, rather than departed from, the pre-GST omission jurisprudence. The crucial inquiry remains whether the legislature or rule-maker has expressly preserved the old rule and proceedings initiated under it.
6. Allied Law Lens
Section 6 of the General Clauses Act, 1897 was central to the dispute. It ordinarily preserves liabilities, rights and proceedings upon repeal of an enactment. However, as explained in Kolhapur Canesugar Works, the provision does not automatically apply to omission of a subordinate rule.
The distinction may appear technical, but it is outcome-determinative. A statutory repeal may invoke Section 6. Omission of a rule, absent a saving device, does not receive that protection.
7. Analysis and Conclusion
Greenlam Industries is the predictable but necessary implementation decision after Goodluck India and Circular No. 264/10/2026-GST. Its practical value lies in the Court’s treatment of post-omission SCNs: these are not merely defective notices requiring re-adjudication; they lack the statutory foundation required to begin adjudication.
The consequence should extend beyond SCNs. Pending refund rejections, adjudication orders under challenge, appeal proceedings and recovery actions founded exclusively on Rule 96(10) require review. Circular No. 264 also states that the same treatment applies, mutatis mutandis, to omitted Rules 89(4A) and 89(4B).
The open question is remedial implementation. Where exporters have already paid tax, interest or penalty under concluded proceedings, the availability and mechanism of consequential refund or re-credit may depend on finality, limitation, unjust enrichment and the precise procedural posture. Greenlam Industries does not decide those questions.
8. Practice Tips
- Identify every pending SCN, order, appeal or recovery action where Rule 96(10) is the sole or material basis of denial.
- File a written closure or withdrawal request citing Goodluck India, Notification No. 20/2024-Central Taxand Circular No. 264/10/2026-GST.
- Preserve shipping bills, refund applications, IGST payment data, EPCG/AA/EOU documentation and correspondence, even though Rule 96(10) is no longer enforceable.
- Where an order contains independent grounds, segregate the Rule 96(10) issue from other alleged refund defects before seeking consequential relief.
- For amounts already recovered, evaluate the remedy promptly; do not assume that quashing of the underlying rule-based action automatically results in electronic re-credit.
References
- M/s Goodluck India Limited v. Union of India and Others, 2026 INSC 821, SLP(C) No. 24550 of 2025 and connected matters, decided on 6 August 2026.
- Kolhapur Canesugar Works Ltd. v. Union of India, (2000) 2 SCC 536; 2000 (119) E.L.T. 257 (S.C.).
- Notification No. 20/2024-Central Tax dated 8 October 2024.
- Circular No. 264/10/2026-GST dated 26 October 2026.
- Section 6 of the General Clauses Act, 1897.
FULL TEXT OF THE ORIGINAL JUDGMENT OF HIMACHAL PRADESH HIGH COURT
By way of the present writ petition, the petitioner has, inter alia, prayed for the following reliefs:
“i) A writ of certiorari or a writ in the nature of certiorari quashing three Impugned Show Cause Notices dated 25.07.2025 (DRC-01) bearing reference nos. ZD020725009340Y, ZD020725009337L, ZD020725009332V issued by Respondent No. 3 Annex…..
ii) Issue an appropriate writ, order or direction declaring Rule 96(10) of CGST Rules, 2017 as unconstitutional (as inserted vide Notification no. 53/2018-CT dated 09.10.2018 and Notification no. 54/2018-CT dated 09.10.2018 as amended from time to time) being ultra-vires Section 16 of the IGST Act, 2017 and Section 54 & 164 of CGST Act as well as violative of Article 14 and 19(1)(g) of the Indian Constitution;
iii) Issue an appropriate writ, order or direction declaring that Notification no. 54/2018-CT dated 09.10.2018 and explanation to clause (b) of Rule 96(10) inserted vide Notification no. 16/2020-CT dated 23.03.2020 are applicable prospectively w.e.f. 23.10.2018;
iv) Issue an appropriate writ, order or direction declaring that in the absence of any saving clause, omission of Rule 96(10) of CGST Rules w.e.f 8.10.2024 vide Notification no. 20/2024-CT dated 8.10.2024 renders the impugned proceedings null and void;”
2. The petitioner is aggrieved by show cause notices dated 25.07.2025, issued under Rule 96(10) of Central Goods and Services Tax Rules, 2017 (hereinafter referred to as ‘the CGST Rules’).
3. The primary contention of the learned counsel for the petitioner is that in light of the fact that Rule 96(10) of the CGST Rules was omitted from the CGST Rules, 2017 vide notification dated 08.10.2024, without any saving clause, action initiated by invoking the provisions of the said rule, after the rule was omitted from the CGST Rules, is per se bad in the eyes of law.
4. Learned counsel for the petitioner has referred to the judgment of the Hon’ble Supreme Court in Special Leave Petition (C) No.24550 of 2025, titled M/s Goodluck India Limited and another Vs. Union of India and Others a/w connected matter, in which judgment there is a reference to the omission of Rule 96(10) with retrospective effect and submitted that in light of the fact that the show cause notice was issued on the foundation of a non-existing rule, said notices being void ab initio are liable to be quashed.
5. Learned Senior Counsel appearing for respondent No.5 and learned Additional Advocate General could not dispute the said facts before us.
6. Hon’ble Supreme Court of India, in M/s Goodluck India Limited and another versus Union of India (supra) has, inter alia, been pleased to hold as under:
“4. Sri S. Dwarakanath, learned ASG took us to the minutes of the 54th meeting of the GST Council held on 09th September, 2024 at New Delhi, fairly conceding that the recommendation is only advisory and it is not mandatory to accept it. In any event the recommendation reads as under, insofar as the omission of Rule 96(10) is concerned:
“The Law Committee observed that operation of rule 96(10) is leading to unnecessary complications without any intended benefit being served and therefore recommended that rule 96(10), rule 89(4A) & rule 89(4B) of the CGST Rules, 2017 may be omitted with prospective effect and that consequential amendments in clause (b) of sub-rule (4B) of rule 86, clause B, clause C and clause E of sub-rule (4) of rule 89 and Explanation (a) to sub-rule (5) of rule 89 of CGST Rules may be made.”
The emphasis on the recommendation is to persuade us to apply it prospectively only, as the Council visualised it, in so far as its application is concerned.
5. The learned Senior Counsel appearing for the respondents on the other hand, relies on Kolhapur Canesugar Works Ltd v. Union of India, 2000 (2) SCC, 536. Therein the question raised was the refund demanded under Rule 10A of the Central Excise Rules, 1944, which though prevalent at the time of issuance of show cause notice, before the final order was passed, it stood omitted. The newly brought in rule did not have provision for enforcing such refund. It was argued for the Department that the introduction of Section 11A, created a fiction by virtue of which proceedings under Rule 10 are deemed to be proceedings under Rule 11A of the Act. The trite principle in common law that the effect of repealing a statute or deleting a provision, is to obliterate it from the statute book, as completely as if it had never existed was highlighted by this Court. An exemption, as engrafted by the provisions of Section 6 of the General Clauses Act; though Section 6 was held to be not applicable in the given circumstances of omission of a rule, should have been incorporated as a saving clause to facilitate continuance of pending proceedings despite the omission, failing which all actions would come to a stop when the omission is given effect. It was held so under paragraph 36- “
36. In the case in hand Rule 10 or Rule 10-A is neither a “Central Act” nor a “regulation” as defined in the Act. It may be a Rule under Section 3(51) of the Act. Section 6 is applicable where any Central Act or regulation made after commencement of the General Clauses Act repeals any enactment. It is not applicable in the case of omission of a “rule”.
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.”
7. At this stage, learned counsel for the petitioner has also handed over Circular No.264/10/2026-GST, dated 26.10.2026. Relevant portion whereof is quoted hereinbelow:
“4. Kind attention is drawn to 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-VIL-75-SC], along with other connected matters. The Hon’ble Supreme Court vide the said order, has held that in the absence of any saving clause or sunset clause accompanying the omission of rule 96(10) of the CGST Rules, the said omission applies to all proceedings pending as on the date of omission.
5. In the matter of M/s Goodluck India Limited, 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-VIL-29-SC-CE], 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.
6. In view of this decision of the Hon’ble Supreme Court, it is hereby clarified that the said omission of rule 96(10) of the CGST Rules will be effective retrospectively from 23.10.2017. Accordingly, the field formations are advised to deal with pending proceedings concerning rule 96(10) in accordance with the said judgment. It may also be noted that such a treatment shall apply, mutatis mutandis, in respect of omission of rules 89(4A) and 89(4B) as well.
7. It is requested that suitable trade notices may be issued to publicize the contents of this Circular.
8. Difficulty, if any, in the implementation of this Circular may be brought to the notice of the Board.”
8. Having heard learned counsel for the petitioner as also learned Senior Counsel appearing for respondent No.5 and learned Additional Advocate General, having gone through the judgment of the Hon’ble Supreme Court in M/s Goodluck and others versus Union of India and others (supra) and in light of the fact that 96(10) of the CGST Rules was indeed omitted by a notification dated 08.10.2024 without any saving clause, we hold that the impugned show cause notices dated 25.07.2025 are non-est in the eyes of law as it was issued by the authority without any statutory backing to issue the same. This writ petition is therefore allowed by ordering the quashing of show cause notices dated 25.07.2025 (Annexure P-2). Consequences to ensue.
Pending miscellaneous application(s), if any, shall also stand disposed of. No order as to costs.
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Disclaimer: This article reflects the author’s views and is not legal advice.
