TaxTMI 
TaxTMI 
2025 (11) TMI 1926
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....tion of India, inter alia, challenging the vires of Rule 96(10) of the Central Goods and Services Tax Rules, 2017 (hereinafter, 'CGST rules'). W.P.(C) 3154/2023 - Vinayak International Housewares Pvt Ltd Vs. UOI & Others 3. In W.P.(C) 3154/2023, the Petitioner-M/s Vinayak International is a manufacturer/exporter of stainless steel kitchen cutleries and kitchen tools. According to the Petitioner, after the introduction of Goods and Services Tax (hereinafter, 'GST') in 2017, Notification No. 79/2017 was issued on 13th October, 2017 by the Ministry of Finance (Department of Revenue), granting exemption, with effect from 13th October, 2017 from payment of Integrated Goods and Services Tax (hereinafter, 'IGST') on goods imported into India, against a valid advance authorization. 4. Thereafter, Notification 3/2018 was issued on 23rd January, 2018 by the Ministry of Finance (Department of Revenue) introducing Rule 96(9) and 96(10) of CGST rules. 5. In terms of Rule 96(9) of the CGST rules, any person who seeks to claim refund of IGST on services exported, was to file Form GST RFD-01 which was to be dealt with in accordance with Rule 89 of the CGST Rules. 6. However, insofar....
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....s also argued that the saving clause in the Notification No. 20/2024 would protect all proceedings prior to the said omission. The relevant portion of the communication from the GST Policy Wing is set out below: "2.1. Rule 96(10) of the CGST Act, 2017 has been omitted prospectively, i.e. with effect from 08.10.2024 vide notification No. 20/2024-Central Tax dated 08.10.2024 (Sl. No. 10), on the recommendations of GST Council in its 54th meeting held on 09.09.2024. It is pertinent to mention that the intent of GST Council was to omit the provisions of rule 96(10) from CGST Rules, 2017 prospectively only, and not to interfere the extant provisions of rule 96(10), as was applicable prior to its omission i.e. 08.10.2024, since the recommendation of the GST Council in its 54th meeting to omit rule 96(10) of the CGST Rules, 2017 was based on the representations received from various exporters, who were facing difficulty due to restriction in respect of refund on exports, imposed vide rule 96(10) of CGST Rules, 2017, in cases where benefit of the specified concessional/exemption notifications is availed on the inputs. Therefore, the Council recommended to prospectively omit rule 9....
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....tes on all GST related matters." 13. The Court has heard Mr. Rajat Mittal, ld. Counsel on behalf of the Petitioner and Mr. Aditya Singla, Mr. Akshay Amritanshu, and Ms. Anushree Narain, ld. Counsels on behalf of the Respondents. 14. Rule 96(10), which is the subject matter of the present petitions, is extracted below for ready reference: "96. Refund of integrated tax paid on goods [or services] exported out of India.- xxx "(10) The persons claiming refund of integrated tax paid on exports of goods or services should not have- (a) received supplies on which the benefit of the Government of India, Ministry of Finance Notification No. 48/2017-Central Tax, dated the 18th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number GSR 1305(E), dated the 18th October, 2017 except so far it relates to receipt of capital goods by such person against Export Promotion Capital Goods Scheme or Notification No. 40/2017-Central Tax (Rate), dated the 23rd October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number GSR 1320(E), dated the 23rd October....
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....refund of accumulated Input Tax Credit (ITC) under rule 89(4) of CGST Rules. Decision-The Council agreed with the recommendations of the Law Committee to omit rule 96(10), rule 89(4A) & rule 89(4B) and for the consequential amendment in clause (b) of sub-rule (4B) of rule 86, clause B, clause C and clause E of sub-rule (4) of rule 89 and Explanation (a) to sub-rule (5) of rule 89 of CGST, Rules, 2017 along with proposed circular." (Emphasis supplied) 16. Subsequently, vide Notification dated 8th October, 2024, notifying the Central Goods and Services Tax 2nd amendment Rules 2024 and sub-clause 10, Rule 96(10) was omitted w.e.f 8th October, 2024. The said omission reads as under: "G.S.R... (E). -In exercise of the powers conferred by section 164 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following rules further to amend the Central Goods and Services Tax Rules, 2017, namely: - 1. (1) These rules may be called the Central Goods and Services Tax (Second Amendment) Rules, 2024. xxx 10. In the said rules, in rule 96, sub-rule (10) sh....
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....he findings rendered in this judgment these Writ Petitions will stand allowed as follows:- (i) Rule 96(10) of the CGST Rules, as inserted by notification No. 53/2018-CT dated 09-10-2018 w.e.f. 23-10-2017 is declared ultra vires the provisions of Section 16 of the IGST Act and unenforceable on account of being manifestly arbitrary; (ii) As a consequence of the above declaration, any action that has been initiated by the issuance of a show cause notice or otherwise or has culminated in an order against the petitioners in these writ petitions on the basis of the provisions contained in Rule 96(10) of the CGST Rules, as inserted by notification No. 53/2018-CT dated 09-10-2018 w.e.f. 23-10-2017, will stand quashed; (iii) It is directed that no proceedings shall be taken to recover any IGST that has been refunded to the petitioners in these writ petitions by applying the provisions of Rule 96(10) of the CGST Rules for the period between 23-10-2017 and 08-10-2024: (iv) In cases where orders have been issued by the Adjudicating Authority including on issues other than those arising out of the application of Rule 96(10) of the CGST Rules, the person aggri....
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....y, the Rule 96 (10) of CGST Rule, 2017 was omitted from the statute book on 8th October, 2024 and the order impugned was passed on 30th January, 2025. 9. Having regard to the judgment delivered in the case of Kolhapur Canesugar Works Ltd. (supra), it would transpire that the effect of omission of rule from the statute book is different from the effect of substitution of rule and the effect of amendment of a statute which is saved by a saving clause. It appears that the Hon'ble Supreme Court having noted the provisions of Section 6 of the General Clauses Act, 1897, had come to a finding that the exception contained in Section 6 of the General Clauses Act applies where any Central Act or Regulation made after commencement of the General Clauses Act repeals any enactment. It is not applicable to omission of a "rule". The Hon'ble Supreme Court had also observed that normal effect of repealing of a statute or deleting a provision is to obliterate it from the statute book subject to the exception engrafted in Section 6 of the General Clauses Act. If, however, a provision of a statute is unconditionally omitted without a saving clause in favour of pending proceeding, all ....
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.... notices as well as orders-in-original passed by the respondents by invoking Rule 96(10) for rejecting the refund claims of the petitioners and therefore, it can be said that these petitions are nothing but pending proceedings before the Court which has not achieved finality when the Notification No. 20/2024 came into force with effect from 8th October, 2024. 204. By Notification No. 20/2024 Rules, 2024 have been notified and as per Rule 10 of the said Rules, Rule 96(10) of the CGST Rules has been omitted with prospective effect. This would give rise to three situations, firstly, whether the same would be applicable retrospectively, or secondly, prospectively or thirdly, same would be applicable prospectively but also to "pending proceedings". As discussed here-in-above, Rule 10 of Rules, 2024 is applicable prospectively and the same also would be applicable to pending proceedings. 205. Therefore, we are of the opinion that Notification No. 20/2024 dated 8th October, 2024 would be applicable to all the pending proceedings/cases meaning thereby that Rule 96(10) would stand omitted prospectively but applicable to pending proceedings/cases where final adjudication ha....
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....ty or protection. Therefore, it is quite unnecessary to determine the issue of the constitutionality of the impugned rules. xxx 59. From the above, it is indisputable that the impugned rules stand deleted. The only dispute revolves around the scope of such omission or repeal. The Petitioners contend that any savings clause did not back such omission or repeal, and therefore, the common law principle regarding repeals obliterating the repealed provision from the statute book or rule book would apply. The Respondents admit the omission or repeal but contend that the common law rule would not apply because pending proceedings have been expressly saved. xxx 65. Thus, subject to further discussion on whether this is a case of omission or repeal backed by any savings clauses, it is evident that an omission or a repeal without any savings clauses would lapse the impugned proceedings or orders unless they qualify as "transactions past and closed". xxx 82. Consequently, based upon the provisions of Section 6 of the General Clauses Act, 1897, the Respondents cannot assert that the show cause notices issued under the omitted or repealed Ru....