If you observe the Acts, usually (there are a few exceptions), Section 2 is about Definitions and the last Section is about Repeal and Savings clause.
Consider this example – GST act is introduced in 2017 and repealed Service Tax, Excise, VAT, etc.
Suppose, the tax departments discover an evasion of VAT by a dealer in 2016, can GST officer open the case and Order the dealer to pay up the taxes?
If the Officer sends a Notice, the dealer may say, Yes, there was tax dues, which I was not aware, but now, VAT Act is repealed (removed/scrapped), how can you ask me to pay the taxes? He is right, isn’t it?
So, in order to give teeth to the Tax Officer to initiate the action against the Tax defaulter under the previous / repealed Acts, this clause called Saving clause is incorporated in every new Act/Code.
In case of GST, you can read Section 174 (the last Section of CGST Act) which says –
- that the repeal shall not affect any right, privilege, obligation or liability acquired or incurred under the repealed act or orders.
- This means, even after the enacted of GST and repealing of Service Tax, the Government can continue an investigation, enquiry or verification, security and assessments, or recovery of arrears, etc.
So, saving clause saves certain provisions, of repealed Act which gives right and liabilities to be carried order after the enacted of the new Act also.