Section 174 of the CGST Act, 2017 - Repeal and Saving

Section 174 is the saving provision that accompanied India's transition to GST. It repeals specified pre-GST central indirect tax enactments while preserving accrued rights and liabilities and allowing specified investigations, assessments, adjudication, recovery, appeals and other proceedings under the earlier laws to continue.

In simple terms: repeal of an earlier tax law does not by itself erase liabilities, rights, proceedings or consequences that Section 174 expressly saves. Sub-section (3) also preserves the general effect of repeal under Section 6 of the General Clauses Act, 1897.

What Section 174 covers

Section 174 forms part of Chapter XXI (Miscellaneous) of the Central Goods and Services Tax Act, 2017. Sub-section (1) repeals specified central excise enactments from commencement of the CGST Act, subject to the statutory exception relating to goods covered by entry 84 of the Union List. Section 173 separately omitted Chapter V of the Finance Act, 1994, subject to the CGST Act.

Section 174 - statutory provision

(1) Save as otherwise provided in this Act, on and from the date of commencement of this Act, the Central Excise Act, 1944 (1 of 1944) (except as respects goods included in entry 84 of the Union List of the Seventh Schedule to the Constitution), the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (16 of 1955), the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 (40 of 1978), and the Central Excise Tariff Act, 1985 (5 of 1986) (hereafter referred to as the repealed Acts) are hereby repealed.

(2) The repeal of the said Acts and the amendment of the Finance Act, 1994 (32 of 1994) (hereafter referred to as "such amendment" or "amended Act", as the case may be) to the extent mentioned in sub-section (1) or section 173 shall not -

  1. revive anything not in force or existing at the time of such amendment or repeal; or
  2. affect the previous operation of the amended Act or repealed Acts and orders or anything duly done or suffered thereunder; or
  3. affect any right, privilege, obligation, or liability acquired, accrued or incurred under the amended Act or repealed Acts or orders under such repealed or amended Acts; provided that any tax exemption granted as an incentive against investment through a notification shall not continue as privilege if the said notification is rescinded on or after the appointed day; or
  4. affect any duty, tax, surcharge, fine, penalty, interest as are due or may become due or any forfeiture or punishment incurred or inflicted in respect of any offence or violation committed against the provisions of the amended Act or repealed Acts; or
  5. affect any investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and any other legal proceedings or recovery of arrears or remedy in respect of any such duty, tax, surcharge, penalty, fine, interest, right, privilege, obligation, liability, forfeiture or punishment, as aforesaid, and any such investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and other legal proceedings or recovery of arrears or remedy may be instituted, continued or enforced, and any such tax, surcharge, penalty, fine, interest, forfeiture or punishment may be levied or imposed as if these Acts had not been so amended or repealed; or
  6. affect any proceedings including that relating to an appeal, review or reference, instituted before, on, or after the appointed day under the said amended Act or repealed Acts and such proceedings shall be continued under the said amended Act or repealed Acts as if this Act had not come into force and the said Acts had not been amended or repealed.

(3) The mention of the particular matters referred to in sub-sections (1) and (2) shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897 with regard to the effect of repeal.

Meaning and legal effect

Repeal: In this context, repeal means that the enactments identified in sub-section (1) ceased to operate prospectively to the extent stated, subject to the CGST Act's exceptions and saving provisions.

Saving: A saving clause preserves specified legal consequences of an earlier enactment despite its repeal or amendment. Section 174 therefore protects prior operation, accrued rights and obligations, tax and other liabilities, and proceedings connected with the pre-GST regime.

Pending and later-instituted proceedings: Sub-section (2) expressly permits covered investigations, inquiries, scrutiny, audit, assessments, adjudication, recovery and other legal proceedings to be instituted, continued or enforced under the saved law. It likewise preserves proceedings concerning appeal, review or reference.

General Clauses Act: Sub-section (3) states that the specific savings in Section 174 do not prejudice the general application of Section 6 of the General Clauses Act, 1897 concerning the effect of repeal.

Practical relevance

Section 174 is principally relevant where a dispute relates to a period governed by the pre-GST central indirect tax regime. Whether a particular notice, demand, penalty, prosecution, recovery or appellate proceeding is valid still depends on the applicable repealed or amended enactment, the facts, limitation provisions and other governing law. Section 174 should therefore be read with the relevant legacy enactment and the specific transitional facts of the case.

Related CGST Act provisions