Omission of Rule 96(10) applies to all pending GST refund proceedings: Supreme Court
A Bench of Justices J.B. Pardiwala and K. Vinod Chandran held that Rule 96(10), omitted without a saving clause, ceases to bind pending IGST refund proceedings.
The Supreme Court has held that the omission of sub-rule (10) of Rule 96 of the Central Goods and Services Tax (CGST) Rules, 2017 applies to every proceeding pending on the date of its omission. A Bench of Justices J.B. Pardiwala and K. Vinod Chandran, deciding a batch led by M/s Goodluck India Limited & Anr. v. Union of India & Ors., dismissed the appeals filed by the Union of India and the Department against a High Court judgment that had reached the same conclusion. The rule, which restricted refund claims for integrated tax paid on exported goods and services, was omitted by Notification No.20/2024 with effect from 8 October 2024. Because the omission carried no saving clause, the Court found the restriction could no longer apply to pending refund claims. The order aims to bring uniformity across conflicting High Court decisions on the issue.
How the batch reached the Court
The lead challenge came from the Union of India and the Department against a High Court judgment holding that the omission of Rule 96(10) applied to every proceeding pending on the date the rule ceased to exist.
Two petitions came from the assessees. In SLP (C) No.24550 of 2025 and SLP (C) No.26411 of 2026, the assessees attacked the vires and validity of Rule 96(10) itself. The High Court had declined to examine that question because it had applied the omission to all pending proceedings. Given the nature of the orders the Court proposed to pass, these two petitions were dismissed as infructuous. Leave was granted in the remaining matters.
The question of law
The Court framed the issue as whether Rule 96(10), as omitted with effect from 8 October 2024, would benefit the assessee in pending proceedings where refund of integrated tax on exports was claimed, so that the refund could be considered without the sub-rule’s restriction.
That restriction had denied the rigor-free refund to a person who received supplies after availing benefits under specified notifications. The assessees argued that once the sub-rule was omitted without a saving clause, it applied squarely to all pending proceedings. The learned Additional Solicitor General resisted that reading.
The GST Council recommendation and the prospectivity argument
Sri S. Dwarakanath, learned ASG, took the Court to the minutes of the 54th meeting of the GST Council held on 9 September 2024 at New Delhi, and fairly conceded that the recommendation was advisory and not binding.
The recommendation recorded that Rule 96(10) was “leading to unnecessary complications without any intended benefit being served” and proposed omission with prospective effect. The Union relied on the word “prospective” to argue the omission should not touch pending proceedings.
The Court rejected that reasoning. It held that the recommendation of prospective omission was advisory and did not bind the rule-making authority. The legislature had brought in no saving clause and no sunset clause when it omitted the sub-rule.
Reliance on the Constitution Bench in Kolhapur Canesugar
The respondents relied on Kolhapur Canesugar Works Ltd v. Union of India, (2000) 2 SCC 536. There, the question concerned a refund demanded under Rule 10A of the Central Excise Rules, 1944, which stood omitted before the final order was passed, and the new rule made no provision to enforce such refund.
The Constitution Bench had applied the common law principle that repealing a statute or deleting a provision obliterates it from the statute book as if it had never existed. It held that Section 6 of the General Clauses Act, which saves proceedings on repeal, was not applicable to the omission of a rule, since a rule is neither a Central Act nor a regulation.
On that basis, the Court in Kolhapur Canesugar held that proceedings under an omitted rule could continue only if there was a provision for their continuance, or a legal fiction by which such proceedings were deemed to continue. The present Bench found that decision applied squarely.
Why the omission ends pending restrictions
The Court read the Council’s own stated reason for the omission against the Union. Rule 96(10) had been removed because it caused unnecessary complications without benefit. The Court held that the intention behind an omission without a saving clause was to end those complications “once and for all”.
The intention could not be to keep the complications alive for pending proceedings. With no saving clause and no legal device deeming continuation, the restriction fell away for all pending refund claims.
The Court found no good reason to interfere with the High Court judgment, which it described as well-reasoned. Told that many proceedings were pending before various High Courts with conflicting decisions, the Court expressed the hope that they would attain closure with this judgment.
Order
The two assessee petitions challenging the vires of Rule 96(10), SLP (C) No.24550 of 2025 and SLP (C) No.26411 of 2026, were dismissed as infructuous. Leave was granted in the remaining matters, and the appeals were dismissed.
The Registry was directed to send a copy of the order to all High Courts. The Court directed that cases on the omission of Rule 96(10) be placed before the appropriate roster Courts, after orders from the respective Chief Justices, expeditiously, to bring quietus to the litigation. Pending applications, if any, stood disposed of.