Calcutta High Court quashes GST proceedings based solely on omitted Rule 96(10), following Supreme Court ruling on its retrospective effect

The petitioners challenged a show-cause notice dated 9 January 2024 issued under Section 74 of the Central Goods and Services Tax Act, 2017, concerning the period July 2017 to March 2021, and consequential orders dated 30 January 2025.

The proceedings were founded on an alleged contravention of Rule 96(10) of the CGST/WBGST Rules, 2017.

Rule 96(10) was omitted unconditionally with effect from 8 October 2024 by Notification No. 20/2024-Central Tax, without a saving clause.

The petitioners relied on the Supreme Court’s decision in M/s. Goodluck India Limited & Anr. v. Union of India & Ors., SLP (C) No. 24550 of 2025, which held that proceedings based on the omitted Rule 96(10) could not be initiated or continued in the absence of a saving clause.

The GST authorities filed an affidavit-in-opposition and contended that their actions were lawful as per the law prevailing at the relevant time.

1. Whether proceedings founded solely on the alleged violation of Rule 96(10) of the CGST/WBGST Rules, 2017 could be initiated or continued after the rule was unconditionally omitted without a saving clause.

2. Whether the show-cause notice dated 9 January 2024 and the consequential orders dated 30 January 2025, being based solely on the omitted Rule 96(10), were legally sustainable.

Rule 96(10) of the CGST/WBGST Rules, 2017 was omitted with effect from 8 October 2024 by Notification No. 20/2024-Central Tax, without any saving clause.

The Court applied the principle in Kolhapur Canesugar Works Ltd. v. Union of India, (2000) 2 SCC 536, that proceedings under an omitted provision may continue only where the omission contains a saving provision or the statute creates an equivalent legal fiction preserving such proceedings.

Relying on the Supreme Court’s decision in M/s. Goodluck India Limited & Anr. v. Union of India & Ors., SLP (C) No. 24550 of 2025, the Court held that, absent a saving clause, Rule 96(10) ceased to exist in law and proceedings based on it could not be initiated or continued.

Section 74 of the CGST Act, 2017, which formed the statutory basis of the impugned show-cause notice, could not independently sustain proceedings founded solely on the omitted rule.

The Court treated the Supreme Court’s decision in Goodluck India as conclusively governing the dispute.

Since Rule 96(10) had been omitted without a saving clause, the respondents could not preserve or continue proceedings merely because the alleged contravention related to an earlier period or because the authorities had acted under the law understood to be applicable at the relevant time.

The show-cause notice and consequential orders were founded solely on Rule 96(10), and therefore lacked a surviving legal basis after the unconditional omission of that rule.

The Court also took judicial notice of the CBIC Office Memorandum dated 24 August 2026, which instructed field formations not to initiate or pursue such proceedings.

Accordingly, it quashed and set aside the show-cause notice dated 9 January 2024 issued under Section 74 of the CGST Act, 2017, and the consequential orders dated 30 January 2025.

The writ petition, W.P.A. 3254 of 2025, was disposed of.