M/S Greenlam Industries LTD And Another vs. The UOI And Others

Held

The Court held that the impugned show cause notices dated 25.07.2025 were non-est in the eyes of law. This was because the notices were issued by the authority without any statutory backing, as Rule 96(10) of the CGST Rules, 2017, had been omitted by a notification dated 08.10.2024, without any saving clause. The Court relied on the Supreme Court's judgment in M/s Goodluck India Limited and another versus Union of India, which, in turn, referred to the Constitution Bench decision in Kolhapur Canesugar Works Ltd. v. Union of India. The principle established was that the omission of a rule, without a saving clause, means it is treated as if it never existed, and pending proceedings can only continue if there is an express provision for their continuance or a legal device to preserve them. Since no such provision existed for Rule 96(10), the notices based on it were invalid. The Court quashed the show cause notices. The issue of the constitutionality of Rule 96(10) and the prospective applicability of notifications were not explicitly decided as the petition was allowed on the ground of the omission of the rule.

Facts

The petitioners, M/s Greenlam Industries Limited and Another, filed a writ petition before the Himachal Pradesh High Court challenging three show cause notices dated 25.07.2025, issued by Respondent No. 3. These notices were based on Rule 96(10) of the Central Goods and Services Tax Rules, 2017. The petitioners contended that Rule 96(10) was omitted from the CGST Rules, 2017, vide a notification dated 08.10.2024, without any saving clause. Therefore, any action initiated under this omitted rule after its omission was legally invalid. The respondents, including the Union of India and the State, could not dispute these facts. The Court also considered a circular issued by the GST authorities dated 26.10.2026, which clarified the implications of the Supreme Court's judgment on the omission of Rule 96(10).

Key Issues

1. Whether show cause notices issued under Rule 96(10) of the CGST Rules, 2017, after the said rule was omitted without a saving clause, are void ab initio and liable to be quashed, in light of the Supreme Court's judgment in M/s Goodluck India Limited and another Vs. Union of India and Others? Petitioner's Contention: The petitioner argued that since Rule 96(10) was omitted on 08.10.2024 without any saving clause, any proceedings initiated based on this rule thereafter are void. They relied on the Supreme Court's decision in M/s Goodluck India Limited, which held that the omission of a rule, without a saving clause, obliterates it as if it never existed, and pending proceedings cannot continue without an express provision or legal device for their preservation. The petitioner also sought to declare Rule 96(10) unconstitutional and certain notifications prospective. Respondents' Contention: The learned Senior Counsel for respondent No.5 and the learned Additional Advocate General for the State could not dispute the facts presented by the petitioner regarding the omission of Rule 96(10) and its implications as per the Supreme Court's judgment.