Omission of Rule 96(10) Applies Retrospectively Without Saving Clause; IGST Refund Recovery SCN and Order Quashed

By | September 18, 2026
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Omission of Rule 96(10) Applies Retrospectively Without Saving Clause; IGST Refund Recovery SCN and Order Quashed
Issue
Whether an SCN and consequential order demanding recovery of IGST refund on exports under the omitted Rule 96(10) of the CGST/GGST Rules can survive after its unconditional omission with effect from October 8, 2024 without a saving clause.
Facts
  • The petitioner, an exporter, received an IGST refund on exports under Section 16 of the IGST Act read with Section 54 of the CGST Act.
  • Rule 96(10) of the CGST/GGST Rules, 2017 was omitted with effect from October 8, 2024 pursuant to Notification 20/2024.
  • Subsequent to the omission, the Revenue issued a Show Cause Notice (SCN) dated March 26, 2025 and passed a consequential order dated June 9, 2025 seeking to recover the IGST refund under Rule 96(10).
  • The petitioner assailed the SCN and order, contending that post-omission, restrictions under Rule 96(10) could not govern pending or subsequent proceedings.
  • The issue stood squarely covered by the Supreme Court judgment in Goodluck India Ltd. v. Union of India.
Decision
  • The High Court held that the omission of Rule 96(10) targeted unnecessary procedural complications and was enacted without any saving or sunset clause.
  • It was ruled that advisory recommendations suggesting prospective operation do not bind the rule-maker when the statutory text contains no saving clause.
  • Consequently, the restrictions under Rule 96(10) cannot survive or be invoked for pending or subsequent proceedings post-omission.
  • The SCN dated March 26, 2025 and the consequential order dated June 9, 2025 were quashed in favor of the assessee.
Key Takeaways
  • Effect of Omission Without Saving Clause: Unconditional omission of a rule without a statutory saving clause wipes out the restriction entirely, preventing tax authorities from initiating or continuing recovery proceedings under the omitted provision.
  • Binding Supreme Court Precedent: The ruling aligns with Goodluck India Ltd. v. Union of India, affirming that post-omission notices issued under Rule 96(10) are legally unsustainable.
  • Primacy of Statutory Rules Over Advisories: Administrative recommendations or advisory notes suggesting prospective applicability cannot override the clear legal impact of an unconditional statutory omission.
HIGH COURT OF GUJARAT
MAC Industry
v.
Union of India
A.S. Supehia and Ms. VAIBHAVI D. NANAVATI, JJ.
R/SPECIAL CIVIL APPLICATION NO. 1693 of 2026
SEPTEMBER  3, 2026
”””
Abhay Y. Desai for the Petitioner. Archit P. Jani for the Respondent.
ORDER
Ms. Vaibhavi D. Nanavati, J.- At the outset, learned advocate Mr.Abhay Desai has submitted that the issue raised in the present writ petition has been laid quietus by the decision of the Apex Court in the case of Goodluck India Ltd. v. Union of India 330/112 GSTL 3 (SC)/2026 SCC OnLine SC 1523. Learned Senior Standing Counsel Mr.Archit P. Jani is unable to controvert that the issue with regard to applicability of provision of Rule 96(10) of the Central Goods and Services Tax Rules, 2017 (for short “the CGST Rules”) has been interpreted by the Apex Court in the said judgment.
2. In the present writ petition, the petitioner has prayed for the following reliefs:
“09. In view of the aforesaid premises, the petitioners humbly pray that:
RELIEFS CLAIMED
A. Your Lordships may be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other writ, order or direction quashing and setting aside the impugned SCN dated 26/03/2025 (annexed at Annexure ‘A’) issued by the 2nd Respondent as well as the impugned order dated 09/06/2025 (annexed at Annexure ‘B’) passed by the 2nd Respondent as being arbitrary, illegal, excessive and wholly without jurisdiction;
B. Pending notice, admission and final hearing of this petition, Your Lordships may be pleased to stay further proceedings for recovery/coercive action pursuant to the impugned order dated 09/06/2025 (annexed at Annexure ‘B’) passed by the 2nd Respondent;
C. Ex parte ad interim relief in terms of prayer ‘B’ may kindly be granted;
D. Such further relief(s) as deemed fit in the facts and circumstances of the case may kindly be granted in the interest of justice, for which act of kindness your petitioners shall forever pray.”
3. The issue with regard to the omission of Rule 96(10) of the CGST Rules vide Notification No.20/2024 with effect from 08.10.2024, whether would ensure to the benefit of assessee in the pending proceedings, wherein, there was a claim of refund of integrated tax paid on goods and services exported out of India can be considered, without restriction under Rule 96(10) of the CGST Rules was considered by the Apex Court. In the said judgment, the Apex Court has held thus:
“7. The Constitution Bench decision applies squarely in the above case. We may also observe that even going by the recommendations as extracted hereinabove, sub-rule (10) of Rule 96 was omitted because it was leading to unnecessary complications without any intended benefit being served’ (sic). As fairly submitted by the learned ASG the legislature has not brought in any saving clause or a sunset clause, when sub-rule (10) of Rule 96 was omitted. The recommendation that the omission should be prospective is also advisory in nature and does not bind the rule making authority. The intention to omit the rule without any saving clause was to bring to an end, the unnecessary complications once and for all and the intention cannot be to keep alive the unnecessary complications insofar as the pending proceedings are concerned.
8. We find no good reason to interfere with the well-reasoned judgment of the High Court. We are told that there are many proceedings pending before the various High Courts and conflicting decisions have also been passed. We hope that such proceedings would get closure with this judgment.
9. The Registry is directed to send a copy of this order to all the High Courts. The Registry of the High Courts will ensure that the cases relating to the subject issue of omission of Rule 96(10) would be placed before the Courts having roster, after taking appropriate orders from the Hon’ble Chief Justice of the respective High Courts, expeditiously to bring quietus in the subject litigation.”
4. Thus, as held by the Apex Court, in absence of any saving clause or a sunset clause on the omission of Rule 96(10) of the CGST Rules, the recommendation vide Notification No.20 of 2024 dated 08.10.2024 would be prospective in nature. Even otherwise, in the facts of the present case, the show cause notice has been issued on 26.03.2025, i.e. after omission of Rule-96(10) of the CGST Rules.
5. Hence, in view of the aforesaid, the writ petition is allowed. The impugned show cause notice dated 26.03.2025 as well as the impugned order dated 09.06.2025 issued by the respondent no.2 are required to be quashed and set set aside and the same are hereby quashed and set aside.