Facts of the cases
After GST rollout, the Government issued various customs and tax notifications (Oct 2017) that provided concessional/exemption treatment for certain imported inputs (e.g., Notifications 78/79/48/40/41 of 2017).
Rule 96(10) (inserted by the CGST rules amendment) placed restrictions on entitlement to IGST refund on export where the exporter had availed benefits under those notifications on inputs — effectively excluding certain exporters from claiming IGST refund via the IGST route.
The revenue issued summons and show-cause notices to the petitioners under Rule 96(10) seeking details and demanding refunds where IGST refunds had been paid.
The GST Council’s 54th meeting recommended omitting Rule 96(10), and Notification No. 20/2024-Central Tax dated 08.10.2024 omitted Rule 96(10) with effect from 8 October 2024.
Multiple High Courts had considered Rule 96(10) in a variety of petitions; some decisions declared the rule unconstitutional, while others dealt with the effect of omission (prospective, retrospective, and whether it applies to pending proceedings).
Issue Invovled
Vires of Rule 96(10): Whether Rule 96(10) — by limiting refunds for exporters who had availed certain customs/tax benefits — was ultra vires Section 16 of the IGST Act and therefore unconstitutional / arbitrary.
Effect of omission: Whether the omission of Rule 96(10) by Notification No. 20/2024 (w.e.f. 08.10.2024) operates prospectively only, and whether that omission applies to pending proceedings (show-cause notices, orders and appeals not finally adjudicated) initiated prior to 08.10.2024.
Validity of proceedings initiated under the omitted rule: Whether summonses, SCNs and orders generated under Rule 96(10) after its omission should stand quashed or can continue (including whether Section 6 of the General Clauses Act or other saving provisions preserve pending actions).
Petitioners (exporters) argued:
Rule 96(10) imposed an additional restriction on the statutory right to refund under the IGST scheme, which is not contemplated by Section 16 of the IGST Act; it therefore created an arbitrary fetter on refunds and was contrary to law.
Since the Rule has been omitted by statutory notification, pending proceedings that had not attained finality must lapse, and earlier revenue actions under Rule 96(10) should be quashed.
Respondents (Union of India / revenue) argued:
The omission of Rule 96(10) by Notification No. 20/2024 was prospective and intended to apply from 08.10.2024 only; the notification did not nullify actions taken before that date.
The saving clause / intent of the GST Council and the rules would protect extant proceedings and permit the revenue to continue actions begun prior to omission. The shipping bill (filed earlier) is treated as the refund application; if filed before notification date, the revenue contended the omission should not help the taxpayer.
Court’s analysis and order
The High Court reviewed the legislative history, GST Council recommendation (54th meeting), the express omission by Notification No. 20/2024 (w.e.f. 08.10.2024), and earlier High Court decisions across jurisdictions (Kerala, Calcutta, Uttarakhand, Gujarat, Bombay etc.) addressing both constitutionality and the legal effect of omission.
Key findings
The GST Council and the Central Government omitted Rule 96(10) with effect from 8 October 2024 after recognising the rule caused unnecessary complications and impeded exporters.
Several High Courts (including Kerala) had already held that Rule 96(10), if retained, created restrictions inconsistent with Section 16 of the IGST Act and, in some cases, declared it ultra vires / unenforceable for the prior period.
Under the authorities following Kolhapur Canesugar Works Ltd. v. Union of India, an unconditional omission of a rule — without a saving clause — generally causes pending proceedings (which are not transactions “past and closed”) to lapse; pending SCNs/orders not finalised cannot be enforced once the rule is omitted unless there is an express saving.
Result in these petitions
The writ petitions were allowed and disposed of in the terms noted (summons, SCNs and resultant orders under Rule 96(10) set aside).
GST Case Law Vinayak International Housewares, M/s. Ashish Foils Pvt Ltd., M/s. Mayedass International Versus Union of India
Citation-2025 TAXONATION 2970 (DELHI)(Click here to read full case law)
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