Rule 96(10) omission invalidates pending GST refund proceedings

Legal rulings have established that pending tax proceedings based on Rule 96(10) of the CGST Rules, 2017, cannot continue following the rule's unconditional omission. Rule 96(10) previously restricted exporters from claiming integrated tax (IGST) refunds if they had availed certain concessional benefits on inputs.

Following the omission of the rule via Notification No. 20/2024-Central Tax on October 8, 2024, courts have addressed whether proceedings initiated while the rule was active could survive. The Supreme Court, in M/s Goodluck India Limited & Another v. Union of India & Others, held that proceedings not past and closed by the date of omission cannot survive in the absence of a saving clause. This principle relies on the interpretation that Section 6 of the General Clauses Act does not preserve such proceedings without explicit protection.

The Calcutta High Court applied this precedent in M/s KSE Electricals Private Limited & Another v. Additional Commissioner, quashing a Show Cause Notice and consequential orders. The court determined that because the proceedings were founded solely on the omitted rule, the demand could no longer be sustained, regardless of whether the rule was in force when the proceedings were initially initiated.