Rejection of IGST Refund Under Omitted Rule 96(10) Lacking Saving Clause Is Unsustainable in Law

Rejection of IGST Refund Under Omitted Rule 96(10) Lacking Saving Clause Is Unsustainable in Law

Issue

Facts

• Refund Claim: The assessee sought a tax refund of IGST paid on export of services for the period of December 2019.
• Rejection of Claim: The Revenue rejected the refund claim under Rule 96(10) of the CGST/KGST Rules, 2017.
• Legal Challenge: The assessee filed a writ petition challenging the rejection order as well as the validity of Rule 96(10).
• Omission of Provision: Rule 96(10) was subsequently omitted from the statute books without any saving or sunset clause.
• Supreme Court Precedent: The matter was considered in light of the binding precedent in Goodluck India Ltd. v. Union of India [  (SC).

Decision

• No Proceedings Under Omitted Rule: Held that proceedings under an omitted rule cannot continue once the rule stands removed without a saving or sunset clause [Paras 5 and 6].
• Invalidity of Restriction: Held that in the absence of a saving clause, the restriction under Rule 96(10) cannot be kept alive to deny refund claims [Paras 5 and 6].
• Sustaining Refund Direction: Held that no interference was warranted with the direction ordering the grant of the refund, and the Revenue’s appeal was accordingly dismissed [Paras 5 and 6].

Key Takeaways

• Effect of Unconditional Omission: Omission of a statutory provision without a specific saving or sunset clause wipes the restriction off the statute book, preventing authorities from enforcing it retroactively against assessees.
• Inapplicability of Rule 96(10) Restrictions: Revenue authorities cannot rely on omitted Rule 96(10) to reject or withhold IGST refund claims on zero-rated supplies.
• Binding Precedent: The principle laid down in Goodluck India Ltd. applies strictly to eliminate departmental challenges premised on omitted procedural restrictions.