In a significant ruling for exporters, the Supreme Court in M/s Goodluck India Ltd. & Ors. v. Union of India & Ors. held that the omission of Rule 96(10) of the CGST Rules, 2017 by Notification No. 20/2024-Central Tax w.e.f. 08.10.2024 applies to all pending refund proceedings in the absence of a saving clause. The dispute concerned the eligibility of exporters to claim IGST refunds without being subjected to the restrictions contained in the erstwhile Rule 96(10).

Facts of the Case:

The dispute arose from a batch of matters concerning the effect of the omission of Rule 96(10) of the CGST Rules, 2017. Rule 96(10) had imposed restrictions on exporters claiming refund of Integrated Goods and Services Tax (IGST) paid on exports where the exporter had procured goods or inputs by availing specified concessional benefits under certain notifications.

Several exporters had challenged denial of refund benefits on the basis of Rule 96(10). Various High Courts held that once Rule 96(10) was omitted by Notification No. 20/2024-Central Tax with effect from 08.10.2024, and since no saving clause accompanied such omission, the restriction could not continue to operate in pending proceedings.

Aggrieved by these decisions, the Union of India and the tax authorities approached the Supreme Court contending that the omission should operate only prospectively and should not affect refund disputes already pending on the date of omission. Simultaneously, certain assessees challenged the constitutional validity of Rule 96(10) itself. However, since the High Courts had already granted relief on the basis of omission of the Rule, the Supreme Court treated the constitutional challenge as infructuous.

The principal controversy before the Supreme Court was whether pending refund proceedings would continue to be governed by Rule 96(10) notwithstanding its omission from the statute book.

Issue:

Whether the omission of Rule 96(10) of the CGST Rules, 2017, without incorporating any saving clause, would apply to pending refund proceedings, thereby entitling exporters to claim IGST refunds without being subjected to the restrictions contained in the omitted provision.

Revenue’s Contentions:

The Revenue argued that:

• The omission of Rule 96(10) should be treated as prospective in operation.
• The recommendation of the GST Council indicated that the omission was intended to operate prospectively.
• Refund claims arising during the period when Rule 96(10) was in force should continue to be governed by the said provision notwithstanding its subsequent omission.

Assessees’ Contentions

The assessees contended that:

• Rule 96(10) stood omitted without any saving clause.
• Once omitted, the rule ceased to exist for all purposes, including pending proceedings.
• In the absence of an express statutory saving provision, proceedings based solely on the omitted rule could not continue.
• The Constitution Bench decision in Kolhapur Canesugar Works Ltd. squarely governed the issue.

Held That:

The Supreme Court upheld the view taken by the High Courts and held that the omission of Rule 96(10) would apply to all pending proceedings. The Court relied upon the Constitution Bench decision in Kolhapur Canesugar Works Ltd. v. Union of India, which lays down that upon omission of a statutory rule, the rule stands obliterated from the statute book as if it never existed, unless the legislature specifically incorporates a saving clause or creates a legal fiction permitting continuation of pending proceedings under the omitted provision. Since Rule 96(10) was omitted without any saving clause, pending proceedings could not continue on the basis of the omitted rule.

The Court also noted that the GST Council itself had observed that Rule 96(10) was leading to unnecessary complications without serving any intended benefit and had recommended its omission. While the Council recommended prospective omission, such recommendation was merely advisory and not binding upon the rule-making authority. The absence of any saving clause indicated a legislative intention to completely remove the complications arising from the rule, including in pending matters. Accordingly, the Supreme Court found no reason to interfere with the High Court judgments and dismissed the appeals filed by the Revenue.

Case Name: M/s Goodluck India Limited & Anr. Versus Union of India & Ors dated 06.08.2026

Citation No. 2026 Taxo.online 2331