High Court quashes Modi Govt’s Rs 117.94 Cr. CGST notice against Morepen Labs.

Shimla, October 14

Himachal Pradesh High Court has quashed a Rs 117.94-crore Central GST recovery notice issued by the Union Government against Morepen Laboratories Limited, ruling that the notice lacked statutory backing as it was issued under a provision that had already been omitted from the CGST Rules without any saving clause to sustain the proceedings.

A Bench of Justice Ajay Mohan Goel and Justice Romesh Verma, in its judgment dated October 12, 2026, held that the show-cause notice dated December 2, 2025, was “non-est in the eyes of law” and ordered it to be quashed. The notice sought recovery of Rs 117,94,03,452 for the tax period from April 2020 to February 2024, besides interest and penalty.

The dispute centred on Rule 89(4B) of the Central Goods and Services Tax (CGST) Rules, 2017. Morepen Laboratories challenged the notice on the ground that the provision had been omitted through a notification dated October 8, 2024, without any saving clause authorising the continuation of proceedings under the deleted rule.

The company argued that the tax authorities could not issue a recovery notice in December 2025 by invoking a provision that was no longer in force. It relied on judicial precedents concerning the legal consequences of omitting statutory rules without provisions preserving pending proceedings.

The Union Government opposed the petition, contending that the process leading to the issuance of the notice had been initiated and completed before the omission of the rule. However, the court observed that the government counsel could not demonstrate that Rule 89(4B) remained in force on the date the notice was issued.

The Bench relied on the Supreme Court’s judgment in M/s Goodluck India Limited versus Union of India, which examined whether proceedings under omitted rules could survive in the absence of a saving clause. The Supreme Court had held that such proceedings could continue only where a legal provision preserved them or an appropriate statutory mechanism permitted their continuation.

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Holding that the impugned notice had been issued without statutory authority, the High Court allowed the writ petition and ordered the notice quashed, with consequential effects to follow. No order was passed as to costs.

The case was registered as CWP No. 20929 of 2025, Morepen Laboratories Limited versus Union of India and others.

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