Bhagwati Tirath Polycontrainers Industries PVT LTD vs. Union Of INDIA Thr The Secretary And Ors

Held

The Court held that all proceedings, except those relating to transactions that are past and closed, based upon Rule 89(4B) of the CGST Rules, 2017, lapse consequent upon its repeal by Notification No. 20/2024 - Central Tax dated October 8, 2024. The Court reasoned that in the absence of a savings clause, the omission of the rule extinguishes the basis for ongoing proceedings. The Court followed its previous decisions in Hikal Ltd. Vs. Union of India and Aarti Drugs Limited vs. Union of India, which dealt with similar situations arising from the repeal of other rules. Accordingly, the Court made the rule absolute, quashing the show cause notice and declaring that pending proceedings based solely on the omitted rule have lapsed and are without jurisdiction. The Court directed that respondents are not entitled to continue, enforce, or adjudicate any action based exclusively on the omitted rule.

Facts

The petitioner, Bhagwati Tirath Polycontrainers Industries Pvt Ltd, filed a writ petition before the Bombay High Court challenging a show cause notice dated July 23, 2025, issued by the Commissioner of CGST, Daman. The show cause notice was based solely on the alleged contravention of Rule 89(4B) of the CGST Rules, 2017. The petitioner sought to quash the notice, declare that proceedings based on the omitted Rule 89(4B) have lapsed, and that any action based on this rule is void ab initio. The respondents are the Union of India and other relevant authorities.

Key Issues

1. Whether proceedings initiated solely under Rule 89(4B) of the CGST Rules, 2017, stand lapsed and are without jurisdiction in view of the omission of this rule by Notification No. 20/2024 - Central Tax dated October 8, 2024, and the absence of a savings clause. Petitioner's arguments: The petitioner contended that the omission of Rule 89(4B) by the notification, without any savings clause, renders all pending proceedings initiated solely under this rule lapsed and without jurisdiction. They argued that the respondents are not entitled to continue, enforce, or adjudicate any show cause notice, demand, recovery, or penalty based exclusively on the omitted rule, as such actions would be void ab initio. Revenue's arguments: The judgment does not record any specific arguments made by the respondents.