The Bombay High Court on Thursday delivered a significant verdict in a batch of petitions led by Hikal Limited vs Union of India & Ors (Writ Petition No. 78 of 2025). The bench comprising Justice M.S. Sonak and Justice Jitendra Jain ruled that pending proceedings initiated under Rule 89(4B) and Rule 96(10) of the CGST Rules, 2017, cannot continue once these provisions have been deleted without any saving clause. The court’s decision brings relief to several companies that had been facing hefty tax demands and refund reversals.
Background
Hikal Limited, a Navi Mumbai-based chemical and pharmaceutical manufacturer, had approached the High Court after the tax authorities issued a show-cause notice in 2024 seeking recovery of more than ₹67 crore. The notice alleged wrongful Integrated GST (IGST) refunds during 2017–2020, citing violations of Rule 96(10). Similar petitions were filed by other firms including Yasho Industries and Responsive Industries, making this a high-stakes case for the industry.
The petitioners argued that the government’s 2024 notification, which omitted the controversial rules, did not preserve past proceedings. “Once the rules are gone, the entire foundation of these cases collapses,” counsel for the companies insisted.
Read Also:-President Confirms Six Additional Judges as Permanent Judges of Bombay High Court.
The bench carefully examined whether the omission of the rules in October 2024 could allow authorities to continue action based solely on them. It noted that the government had not inserted any “savings clause” to protect pending investigations or demands.
“The bench observed, ‘When a provision is taken off the statute book without saving its operation, proceedings initiated under it cannot survive.’” The judges also pointed out that the only allegations against the petitioners were tied to these specific rules, with no independent charge of fraud or misdeclaration.
The High Court ruled in favor of the petitioners. All show-cause notices and recovery actions based on Rule 89(4B) and Rule 96(10) were declared unsustainable. In effect, the GST demands raised against Hikal Limited and other companies under these rules stand quashed.
The judgment is expected to have far-reaching consequences for exporters and manufacturers across Maharashtra and beyond, many of whom were caught in prolonged disputes hinging solely on the now-repealed provisions.
Case Title :Hikal Limited vs Union of India & Others
Case Number: Writ Petition No. 78 of 2025
