TaxTMI 
TaxTMI 
Rule 96(10) Roadblock Falls for Pending Export Refund Claims
X X X X Extracts X X X X
X X X X Extracts X X X X
....ule 96(10) Roadblock Falls for Pending Export Refund Claims<br>By: - Raj Jaggi<br>Goods and Services Tax - GST<br>Dated:- 14-8-2026<br>When a Deleted Rule Meets a Pending Refund The Supreme Court's order in M/s Goodluck India Limited & Anr. Versus Union of India & Ors. - 2026 (8) TMI 719 - Supreme Court, is short in length but very significant in consequence. It deals with the omission of Rule 96(10) of the CGST Rules, 2017 and its impact on pending refund proceedings relating to IGST paid on exports. Before its omission, Rule 96(10) placed restrictions on the refund of integrated tax paid on the export of goods or services where specified benefits under certain exemption or concessional notifications had been availed. In pra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ctical terms, exporters who had exported goods on payment of IGST and claimed a refund of such IGST faced denial when the Department considered that they fell within the restriction created by Rule 96(10). This led to extensive litigation across the High Courts. The Gujarat High Court, in the detailed judgment reported as Messrs Addwrap Packaging Pvt. Ltd. & Anr. Versus Union Of India & Ors. - 2025 (6) TMI 1156 - GUJARAT HIGH COURT, had examined the controversy at length in a large batch of matters led by Messrs Addwrap Packaging Pvt. Ltd. & Anr. Versus Union Of India & Ors. - 2025 (6) TMI 1156 - GUJARAT HIGH COURT. That judgment discussed the legislative history of Rule 96(10), the difficulties faced by exporters, the recommendation of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the GST Council, and the legal effect of omission of the rule by Notification No.20/2024-Central Tax dated 08.10.2024. The Department challenged the Gujarat High Court view before the Supreme Court. The Supreme Court has now dismissed the Department's appeals and affirmed the result. The Export Refund Scheme Cannot Be Read Without Its Purpose Exports occupy a special place in GST. The broad principle of zero-rating is that exports should not bear the burden of domestic tax. The exporter may either export under bond or letter of undertaking without payment of tax and claim a refund of accumulated input tax credit, or export on payment of integrated tax and claim a refund of the tax so paid. Rule 96 deals with the refund of integrat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed tax paid on goods or services exported out of India. Rule 96(10) operated as a restriction on one refund route. It restricted the refund of IGST paid on exports where certain specified benefits had been availed. The apparent concern behind the rule was to prevent double benefit. However, in practice, the rule created serious difficulties. Exporters argued that the refund of IGST was being denied even in situations where the benefit availed on inputs was limited, or where the alleged double benefit was not real in the manner assumed by the Department. The Gujarat High Court noticed this background. The litigation was not merely academic. It involved refund claims, show cause notices, Orders-in-Original, and pending proceedings in wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ich exporters were facing denial of refund by invoking Rule 96(10). Therefore, when the rule was omitted, the central question became whether pending cases should still be governed by a restriction that had been removed from the rule book. The GST Council Saw the Complication, but the Law Did the Work A major development occurred at the 54th meeting of the GST Council on 09.09.2024. The Law Committee observed that Rules 96(10), 89(4A) and 89(4B) were causing unnecessary complications without any intended benefit. It recommended that these rules be omitted with prospective effect. Thereafter, Notification No.20/2024-Central Tax dated 08.10.2024 omitted Rule 96(10). Before the Supreme Court, the Union of India relied on the GST Counc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....il's recommendation to argue that the omission should operate only prospectively and not benefit pending proceedings. The learned Additional Solicitor General accepted that the GST Council's recommendation was advisory, not mandatory. This became important because the actual notification omitting Rule 96(10) did not contain any saving clause preserving pending proceedings. The Supreme Court treated the absence of a saving clause as decisive. The GST Council's recommendation may explain why the rule was omitted, but the legal effect must be determined from the rule as omitted and from the presence or absence of any saving provision. If the rule-making authority wanted old pending matters to continue under the omitted rule, it ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....could have said so expressly. It did not. A Saving Clause Is the Bridge That Was Never Built The most important legal principle in the judgment concerns the effect of omitting a rule without a saving clause. A saving clause serves a crucial legal function. It preserves rights, liabilities, investigations, proceedings or actions under an old provision even after that provision is repealed or omitted. Without such a clause, the old provision may not continue to govern pending matters, particularly when the omitted provision is a rule rather than a Central Act. The assessees relied on KOLHAPUR CANESUGAR WORKS LTD. Versus UNION OF INDIA - 2000 (2) TMI 823 - Supreme Court. In that Constitution Bench decision, the Supreme Court had ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....explained that where a rule is omitted without a saving clause and without any legal fiction, pending proceedings under the omitted rule cannot continue. Section 6 of the General Clauses Act protects certain consequences of repeal of Central Acts and Regulations, but it does not automatically apply to omission of rules. This principle was central to the Supreme Court's conclusion in Goodluck India. Rule 96(10) was omitted, and no saving clause was inserted. No legal fiction was created to hold that pending proceedings would continue as if Rule 96(10) still existed. Therefore, pending refund proceedings could not be decided by applying the omitted restriction. Pending Proceedings Are Not the Same as Closed Cases A crucial distin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ction must be borne in mind. The Supreme Court's decision does not mean that every concluded matter can be reopened merely because Rule 96(10) has been omitted. The focus is on pending proceedings. A pending refund claim, show cause notice, adjudication, appeal, or writ petition stands on a different footing from a case that has already achieved finality. The Gujarat High Court had expressly dealt with this issue. The Revenue had argued that writ petitions challenging the validity of Rule 96(10) should not be treated as pending proceedings for the purpose of applying the omission. The High Court rejected this argument because the petitioners had also challenged show cause notices and Orders-in-Original passed by invoking Rule 96(10).....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Therefore, the matters were live disputes and had not achieved finality. This distinction gives the judgment its practical balance. It does not create disorder by reopening closed matters. At the same time, it prevents an omitted refund restriction from being used to decide live disputes. The law that no longer exists cannot be kept alive by administrative memory. The Supreme Court Refined the Route, but Affirmed the Destination The Gujarat High Court held that the omission of Rule 96(10) was prospective but would apply to all pending proceedings where final adjudication had not taken place. It also considered the GST Council's recommendation. The Supreme Court affirmed the result but placed greater emphasis on the absence of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a saving clause and the binding principle in Kolhapur Canesugar Works. This refinement is important. The Supreme Court did not treat the GST Council's recommendation as controlling. It noted that the recommendation was advisory. It also observed that Rule 96(10) had been omitted because it was creating unnecessary complications without any intended benefit. If the rule was removed to end complications, it would be contrary to the object of the omission to keep those complications alive in pending proceedings. The Supreme Court therefore found no reason to interfere with the Gujarat High Court judgment. The Department's appeals were dismissed. The Vires Challenge Became Unnecessary One notable feature of the litigation is....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that exporters also challenged the validity of Rule 96(10). They advanced several arguments, including arbitrariness, proportionality, classification among exporters, overreach beyond rule-making power, and inconsistency with the export refund scheme. The Gujarat High Court recorded these issues but ultimately did not decide the rule's constitutional validity because the rule had already been omitted and the omission was held applicable to pending cases. The Supreme Court followed the same practical route. Since Rule 96(10) stood omitted and could not govern pending refund proceedings, the vires challenge no longer required examination in the matters before it. This approach avoided an unnecessary constitutional ruling, as the immed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iate controversy could be resolved on the basis of omission without a saving clause. This is an important judicial discipline. Courts often avoid deciding constitutional validity where the case can be resolved on a narrower statutory ground. Here, the decisive ground was not whether Rule 96(10) was valid or invalid when it existed. The decisive ground was whether it could continue to govern pending refund disputes after its omission without any saving clause. The answer was no. A Connected Refund Principle Emerges From Rule 89 Omissions Also The present ruling may also be usefully read with the Gujarat High Court decision in Alstom Transport India Limited Versus Union of India & Ors. - 2026 (7) TMI 576 - GUJARAT HIGH COURT, wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ich dealt with omission of restrictive refund provisions without saving clause in the context of pending refund proceedings. That case considered the effect of omission of rules such as Rule 89(4B) and Rule 96(10), and proceeded on the same broad legal principle: where a restrictive refund rule is omitted without preserving pending proceedings, such omitted restriction should not ordinarily be applied to live refund disputes. This connected reference is useful because Rules 96(10), 89(4A) and 89(4B) formed part of the same larger refund-restriction framework. The GST Council itself considered these provisions together while recommending their omission. The common concern was that these rules had complicated export refund administration w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ithout meaningfully serving the intended purpose. For exporters and professionals, the common principle is more important than the particular rule number. Once the rule-making authority removes a restrictive refund provision and does not save pending proceedings, refund authorities must be careful before relying on the old restriction. The first question should be whether the proceeding is still alive. The second should be whether any saving clause preserves the old rule. If the answer to the second question is no, the old restriction cannot be applied merely because the refund period is in the past. Refund Administration Must Follow the Law as It Stands The practical consequence of the Supreme Court's judgment is significant. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Pending refund claims or proceedings involving Rule 96(10) should now be examined without applying the omitted restriction. This does not mean every refund must be granted automatically. The refund authority may still examine other statutory conditions, documents, eligibility, proof of export, payment of tax, unjust enrichment where applicable, limitation, and compliance with relevant procedural requirements. However, denial solely on the basis of the omitted Rule 96(10) cannot survive in pending proceedings. If a show cause notice, order, or appeal rests only on that rule, the taxpayer has a strong basis to seek relief. If other independent grounds exist, they may still require examination. The judgment removes the old obstruction posed....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by Rule 96(10); it does not abolish lawful refund scrutiny. For departmental officers, the judgment provides administrative clarity. Files must be reviewed to determine whether refund denial is based on Rule 96(10). If the matter is pending and the rule has been omitted without a saving clause, the authority should not continue the dispute as if the rule still exists. This will reduce avoidable litigation and bring uniformity across pending cases. The Direction to High Courts Signals Finality The Supreme Court noted that many proceedings were pending before various High Courts and that conflicting decisions had been rendered. It therefore directed its Registry to send a copy of the order to all High Courts. The High Courts' Re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gistries were directed to ensure that cases relating to the omission of Rule 96(10) are placed before the appropriate Benches after obtaining orders from the respective Chief Justices. This direction is unusual in its practical importance. It shows that the Supreme Court was conscious of the spread of litigation across the country. The aim was not merely to decide one batch of appeals but to bring closure to a recurring national refund controversy. The message to pending litigants is clear. If their disputes involve the application of Rule 96(10) after its omission, the Supreme Court's order should guide the outcome. The litigation should not continue on the old assumption that Rule 96(10) can still control pending claims. A Sa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ving Clause Decides How Far the Old Rule Travels The larger lesson of Goodluck India lies in the role of a saving clause. When a rule is omitted, the question is not only what the old rule said, but also whether the omission preserves pending proceedings. A saving clause works as the legal bridge between the deleted provision and live disputes. Since Rule 96(10) was omitted without such a bridge, the old restriction could not continue to govern pending export refund claims. This principle is especially important in GST, where rules are frequently amended, substituted and omitted. The date of change, the presence or absence of a saving clause, and the status of the proceeding may decide the fate of the dispute. The Old Restriction C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....annot Decide the New Course Goodluck India leaves a clear rule for pending export refund disputes. Once Rule 96(10) was omitted without a saving clause, the old restriction could no longer block pending claims. The Gujarat High Court's view has been affirmed, and pending litigation on this issue is expected to move towards closure. For exporters, officers and professionals, the message is straightforward. A live refund claim must be examined under the law that governs the pending proceeding. If the omitted restriction has not been expressly saved, it cannot be revived by administrative insistence. *** =============<br> Scholarly articles for knowledge sharing by authors, experts, professionals ....