10-05-2025
Uttarakhand HC voids state GST orders after rule deletion
Dehradun:
Uttarakhand high court
set aside orders passed by the state GST department, ruling that no action could be taken under Rule 96(10) of the CGST Rules, 2017, after its omission on Oct 8, 2024, as there was no saving clause allowing for pending proceedings to continue.
A division bench comprising chief justice G Narendar and justice Alok Mahra passed the order while disposing of a case filed by M/s Sri Sai Vishwas Polymers, a partnership firm. The petitioner challenged the validity of Rule 96(10), calling it ultra vires to section 16 of the IGST Act, 2017, read with section 54 of the CGST Act, 2017. The firm, which manufactures gold bars and jewellery under Chapter 71 of the Central Excise Tariff Act, 1985, was audited by officers from the state goods and services tax department. The department alleged the assessee had wrongly claimed a refund of Rs 1,05,25,755 under IGST. Following the audit, the department issued a show cause notice and later confirmed the demand. The assessee challenged the proceedings, arguing that they were based on an alleged violation of Rule 96(10), which had already been omitted from the CGST Rules from Oct 8, 2024. It contended that no action could be taken under a rule that no longer existed in the statute. In response, the department said that the show cause notice was issued while the rule was still in force and that the omission would only operate prospectively. Hence, proceedings initiated before the rule's deletion should be allowed to continue. The bench noted that the Kerala high court had already declared the rule ultra vires in the case of Sance Laboratories Pvt Ltd vs Union of India. Following this, the rule was deleted through a notification in Oct 2024. The court said it would be redundant to again declare it ultra vires to section 16 of the IGST Act. The bench concluded that since the rule had been unconditionally omitted without a saving clause, all actions based on it must cease from the date of its deletion. It allowed the petition and set aside the state GST department's order issued on Feb 3 this year.
