Facts of the Case:

In this case, the petitioner engaged in the manufacture and export of products. The dispute related to refund of Integrated GST (IGST) amounting to approximately ₹6.28 crore claimed on export of goods. For manufacturing its export products, the petitioner imported raw materials under the Advance Authorisation Scheme, which permitted duty-free imports. Simultaneously, the petitioner exported finished goods on payment of IGST and thereafter claimed refund of such IGST paid on exports under Section 16 of the IGST Act read with Section 54 of the CGST Act and Rule 96 of the CGST Rules.

The department alleged that the petitioner had availed a “double benefit” by importing inputs without payment of IGST under exemption notifications while also claiming refund of IGST paid on exported goods. Accordingly, proceedings were initiated alleging contravention of Rule 96(10) of the CGST Rules, which restricted refund of IGST paid on exports where specified customs exemption benefits had been availed.

A show cause notice under Section 74 was issued proposing recovery of the refunded amount with interest and penalty. During adjudication, the petitioner argued that Rule 96(10) itself had been omitted by Notification No. 20/2024-Central Tax dated 8 October 2024 pursuant to recommendations of the GST Council in its 54th Meeting. Therefore, according to the petitioner, the very foundation of the proceedings had ceased to exist and all pending proceedings stood extinguished in absence of any saving clause.

Despite such contention, the Proper Officer passed the impugned adjudication order confirming the demand leading to the present writ petition.

Issue:

Whether proceedings initiated under Section 74 of the CGST Act for alleged contravention of Rule 96(10) of the CGST Rules could continue after omission of Rule 96(10) by Notification No. 20/2024-Central Tax dated 8 October 2024, in absence of any saving clause preserving pending proceedings.

Held That:

The High Court held that the entire foundation of the proceedings rested upon alleged violation of Rule 96(10) of the CGST Rules. Once Rule 96(10) was omitted from the statute book by Notification No. 20/2024-Central Tax dated 8 October 2024, and no saving clause was incorporated to preserve pending proceedings, all proceedings founded upon such Rule automatically lapsed.

The Court relied extensively upon the decisions of the Supreme Court in Rayala Corporation (P) Ltd. v. Director of Enforcement and Kolhapur Canesugar Works Ltd. v. Union of India to reiterate that Section 6 of the General Clauses Act applies only to repeal of a Central Act or Regulation and not to omission of rules. Therefore, in absence of a specific saving provision, omitted rules are treated as if they never existed for pending proceedings.

The Court also relied upon the decisions of the Bombay High Court in Hikal Limited, the Gujarat High Court in Addwrap Packaging Pvt. Ltd., and the Delhi High Court in Vinayak International Housewares Pvt. Ltd., all of which had consistently held that omission of Rule 96(10) results in abatement of pending proceedings unless the matter had attained finality as a “past and closed transaction.”

Accordingly, the Court quashed the Order-in-Original dated 4 February 2025 and all consequential demands raised in Form GST DRC-07.

Case Name: Techno Waxchem (P.) Ltd. v. Union of India dated 22.05.2026

To read the complete judgement 2026 Taxo.online 1440