Himachal Pradesh High Court: Post-Omission SCNs under Rule 96(10) Are Non-Est Absent Saving Clause

Executive Summary

The High Court quashed three Form GST DRC-01 notices issued in July 2025 under the already-omitted Rule 96(10). The omission of 8 October 2024 carried no saving or sunset clause. Following the Supreme Court’s decision in Goodluck India, pending proceedings under the rule cannot survive. The ruling provides immediate relief to exporters facing recovery of IGST refunds on the ground of alleged dual benefit.

1. The Issue

The petitioner, an exporter of decorative laminates, received three notices dated 25 July 2025 proposing recovery of tax, interest and penalty aggregating approximately Rs 7.68 crore. The notices invoked the restriction in Rule 96(10) for the periods October 2018–March 2019, April 2019–March 2020 and April 2020–March 2021, alleging that the petitioner had availed specified customs or GST exemptions while claiming IGST refund on exports. By the date of the notices, Rule 96(10) had already been omitted by Notification No. 20/2024-Central Tax dated 8 October 2024 without any express saving clause. The precise question was whether a show-cause notice issued after the omission could still be sustained merely because the underlying exports related to a period when the rule was in force.

2. Department's Arguments

The Revenue contended that the restriction was in force during the relevant tax periods and that the omission was intended to be prospective only. It relied on the GST Council’s recommendation that the omission should operate prospectively. The notices, it was argued, were merely recovery proceedings in respect of refunds already granted under a rule that had then been validly applicable. The Department also pointed to the absence of any express retrospective language in the notification.

3. Assessee's Arguments

The petitioner submitted that the omission without a saving clause extinguished the rule for all purposes, including pending or prospective proceedings. It relied on the Supreme Court’s decision of 6 August 2026 in M/s Goodluck India Limited v. Union of India , which had held that the omission applies to all proceedings pending on the date of omission. The petitioner further challenged the constitutional validity of the rule (as originally framed and as amended) as ultra vires Section 16 of the IGST Act, Sections 54 and 164 of the CGST Act and Articles 14 and 19(1)(g). It also sought a declaration that the amendments to the rule were prospective only from 23 October 2018.

4. Holding and Reasoning

The High Court quashed the three notices as non-est. It held that, in the absence of a saving or sunset clause, the omission of Rule 96(10) on 8 October 2024 applied to all proceedings that had not attained finality by that date. The Court followed the binding ratio of the Supreme Court in Goodluck India , which had itself relied on the Constitution Bench decision in Kolhapur Canesugar Works Ltd. v. Union of India [(2000) 2 SCC 536]. The Supreme Court had clarified that Section 6 of the General Clauses Act, 1897 does not apply to the omission of a rule; pending proceedings under the omitted rule lapse unless a specific saving provision or legal fiction preserves them. The GST Council’s recommendation of prospective effect was held to be merely advisory and non-binding on the rule-making authority. Consequently, the High Court treated the post-omission notices as lacking any legal foundation. (The Court does not appear to have ruled on the broader constitutional challenge to the original rule, as that issue had been rendered academic.)

5. Then and Now: The Pre-GST Lineage

The ratio is a direct application of the principle laid down in Kolhapur Canesugar Works (Central Excise). There, Rules 10 and 10-A of the Central Excise Rules, 1944 were omitted and replaced by a new Rule 10 without any saving clause. The Supreme Court held that Section 6 of the General Clauses Act applies only to the repeal of a Central Act or Regulation, not to the omission of a rule. Pending recovery proceedings under the omitted rules therefore lapsed. GST law has not modified this principle. Notification No. 20/2024-Central Tax simply omitted Rule 96(10) without inserting any saving language of the kind that would have preserved pending refund-recovery actions. The same reasoning has been extended, mutatis mutandis, by CBIC Circular No. 264/10/2026-GST dated 26 October 2026 to the simultaneous omission of Rules 89(4A) and 89(4B).

6. Allied Law Lens

The case turns on the interaction between the rule-making power under Section 164 of the CGST Act and Section 6 of the General Clauses Act, 1897. Because a rule is neither a “Central Act” nor a “Regulation” within the meaning of the General Clauses Act, its omission does not automatically save pending proceedings. The absence of an express saving clause is therefore decisive. The judgment also illustrates the limited role of GST Council recommendations: they guide policy but do not override the legal effect of the statutory instrument actually notified.

7. Analysis and Conclusion

The reasoning is sound and consistent with settled principles on the effect of omission of subordinate legislation. The Supreme Court has already settled the core question in Goodluck India; the High Court’s application is straightforward. No conflicting High Court view appears to have survived the Supreme Court’s decision. An SLP is unlikely to succeed on the central issue. Open questions remain only on the precise outer boundary of “pending” proceedings (for example, where a refund has been rejected and the limitation for appeal has expired before 8 October 2024) and on the treatment of Rules 89(4A) and 89(4B) in individual cases. The Board’s Circular No. 264/2026 has already directed field formations to deal with pending Rule 96(10) matters in accordance with the Supreme Court’s ruling.

8. Practice Tips

• Preserve the complete trail of the original refund claim, the show-cause notice, any reply, and the date on which the proceeding was still open on 8 October 2024.
• In replies and appeals, specifically plead the omission without saving clause and cite both Goodluck India (6 August 2026) and Kolhapur Canesugar Works .
• Seek withdrawal or quashing of any notice issued after 8 October 2024 that still relies on Rule 96(10); the same argument applies to Rules 89(4A) and 89(4B).
• Where proceedings have already been concluded before the omission, examine limitation and the possibility of a fresh claim under the post-omission regime rather than reopening a closed matter.
• Maintain a record of the GST Council minutes recommending the omission, solely to demonstrate that even the Council’s prospective recommendation was not given legislative effect.

Case Details:

• Title: Greenlam Industries Limited vs Union of India
• Court: Himachal Pradesh High Court
• Judges: Justice Ajay Mohan Goel and Justice Yogesh Jaswal
• Citation: CWP No.13132 of 2025
• Dated: 03-Nov-2026

References

• Greenlam Industries Limited & Another v. Union of India & Others , High Court of Himachal Pradesh, order dated 3 November 2026.
• M/s Goodluck India Limited & Anr. v. Union of India & Ors. , Supreme Court, judgment dated 6 August 2026 (SLP (C) No. 24550 of 2025 and connected matters).
• Kolhapur Canesugar Works Ltd. v. Union of India , (2000) 2 SCC 536.
• Rule 96(10) of the CGST Rules, 2017 (omitted by Notification No. 20/2024-Central Tax dated 8 October 2024).
• Sections 54 and 164 of the CGST Act, 2017; Section 16 of the IGST Act, 2017.
• Circular No. 264/10/2026-GST dated 26 October 2026.
• Section 6 of the General Clauses Act, 1897.