TaxTMI 
TaxTMI 
2026 (8) TMI 1280
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....e Respondent No.3. b) To issue order(s), directions, writ(s) in the nature of Certiorari quashing the SCN dated 07.10.2020 issued by the Respondent No.5 annexed at Annexure-R; c) To issue order(s), directions, writ(s) in the nature of mandamus allowing the pending refund of IGST paid by the Petitioner. d) To issue order(s), directions, writ(s) in the nature of mandamus holding that no interest is payable on the amount of IGST paid to comply with Explanation to Rule 96(10) inserted by Notification No.16/2020-CT dated 23.03.2020, if paid by the petitioner; e) In the alternative and without prejudice to prayer (a), to issue a writ of mandamus directing Respondents to allow the petitioner to amend the Shipping Bills, invoices and the GST Return and consider the exports undertaken by the Petitioner as Zero-rated Supply undertaken under Bond or Letter of Undertaking and in effect allow them to claim the refund of the unutilized Input Tax Credit in terms of Section 16(3)(a) of the IGST Act read with Section 54 of the CGST Act and Rule 89 of the CGST Rules by filing an manual application in this regard; f) To issue order(s), directions, writ(s) ....
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....mparison of the right to a refund flowing from Section 16(3)(a) of the IGST Act (in terms of Rule 89 of the CGST Rules) and the right to a refund following from Section 16(3)(b) of the IGST Act (in terms of Rule 96 of the CGST Rules). It may be noted that the reference to the statutory provisions is with reference to the provisions as they stood prior to the amendment of Section 16 w.e.f. 01-10-2023. The learned Senior Counsel appearing for the petitioner in W.P (C) No. 17447/2023 has provided the following comparison statement. A perusal of the statement shows as to how the working of Rule 96(10) of the CGST Rules has resulted in hostile discrimination amongst exporters who opt to apply for a refund under Section 16(3)(a) read with Rule 89 of the CGST Rules and those who opt to apply for a refund in the manner contemplated by Section 16(3)(b). The statement is extracted below in tabular form :- SI. No. Particulars Rule 89 Rule 96 1. Parent Provision Section 16(3)(a) of the IGST Act read with Section 54 of the CGST Act provides for refund of unutilized input tax credit ("ITC") in respect of zero- rated supplies. Section 16(3)(b) read ....
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.... date of issue of invoice for export of services, if payment is not received i As per Rule 96(1), a shipping bill fled by an exporter shall be deemed to be an application for refund of IGST paid on the export of goods. ii The common portal designated by the Customs shall electronically transmit the details of relevant export invoices in respect of the export of goods contained in Form GSTR-1 (statement of outward supplies), to the GST common portal. iii The shipping bill shall be deemed to be an application, provided: ● the person in-charge of conveyance departure or export manifest or an export report covering the number and shipping bills or bills of export; and ● the applicant has furnished a valid return in Form GSTR-3B (monthly return). iv In terms of Rule 96(3), the claim of refund of export of goods shall be processed by a proper officer and an amount equal to the IGST paid shall be electronically credited to the bank account of the applicant. v Detailed Guide on IGST refunds in ICES issued by Directorate General of Systems, CBEC pursuant to the IGST refund module being made operational Since 10.10.2017. vi Rule 96(....
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....d substitution of Rule 89(4A) and (4B) :- SI.No Rule 89 Rule 96 1. Refund of unutilized ITC shall be calculated in accordance with Rule 89(4). Refund is claimed under Rule 89(4A) or (4B) or both: (i) Net ITC shall be reduced by the ITC availed for which refund is claimed under Rule 89 (4A) or (4B) or both; (ii) Turnover of zero-rated supply of goods shall be reduced by turnover of supplies in respect of which refund is claimed under Rule 89(4A) or (4B) or both; (iii) Adjusted total turnover shall be reduced by the turnover of supplies in respect of which refund is claimed under sub-rule (4A) or sub-rule (4B) or both; (iv) Net ITC is defined as ITC availed on inputs and input services during the relevant period other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both. Note: The above definition refers to ITC availed on inputs and input services availed during the relevant period which is the period for which the claim has been fled. Rule 96(9) provides that refund of IGST paid on export of services shall be dealt with in accordance with Rule 89. Rule 96(3) provides that ....
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..... 79/2017-Cus dated 13.10.2017 (nil rate of duty - export benefit under Customs), except so far as it relates to receipt of capital goods against Export Promotion Capital Goods (EPCG) Scheme. Note: (i) The word "person" would have the same meaning assigned under Section 2(84) of the CGST Act. (ii) There is no identification of time or consignment, and where or when the benefit of the above Notifications has to be availed. Shayara Bano (supra) is the authority for the proposition that when the Court finds the provisions of plenary or subordinate legislation manifestly arbitrary, those provisions must be struck down. In paragraph 101 (of the SCC report) of Shayara Bano (supra) the law is stated thus :- "101. It will be noticed that a Constitution Bench of this Court in Indian Express Newspapers (Bombay) (P) Ltd. v. Union of India stated that it was settled law that subordinate legislation can be challenged on any of the grounds available for challenge against plenary legislation. This being the case, there is no rational distinction between the two types of legislation when it comes to this ground of challenge under Article 14. The test of manifest....
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....ing of Rule 96(10) of the CGST Rules are engaging the attention of the GST Council. Today, when these writ petitions are taken up again, it is brought to my notice that notification No.20/2024-Central Tax, dated 08- 10-2024, has now been issued deleting the provisions of Rule 96(10) of the CGST Rules w.e.f. 08-10-2024. However, it is noticed that the notification is prospective and does not deal with cases where the refund of IGST has either been denied or is proposed to be denied on account of the provisions contained in Rule 96(10) of the CGST Rules. Therefore, notwithstanding the deletion of Rule 96(10) w.e.f. 08-10-2024, it falls upon this Court to declare upon its validity for the prior period. Having regard to the 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....
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.... more. 8. The next question that falls for consideration in the instant case is whether respondent no. 2 was at all competent to pass an order subsequent to the omission of the concerned rule. Admittedly, 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 stat....
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....rd "repeal" and hence omission of Rule 96(10) with effect from 8th October, 2024, would amount to repeal without any saving clause. General Clauses Act, 1897 is largely based on the English Interpretation Act, 1889 and according to such law, the effect of repealing a statute was to obliterate it completely from the records of Parliament as if it had never been passed, except for the purpose of those actions, which were commenced, prosecuted and concluded while it was an existing law. Therefore, repeal without any saving clause would destroy any proceeding whether or not yet begun or whether pending at the time of enactment of the repealing Act and not already prosecuted to a final judgment so as to create a vested right. However by incorporation of Section 38(2) in the English Interpretation Act, 1889 which deals with effect of repeal in future Acts which is equivalent to section 6 of the General Clauses Act has been analysed by the Hon'ble Apex Court in case of Gammon India Ltd v. Special Chief Secretary and others (supra) as under: "50. The next question is whether the application of that principle could or ought to be limited to cases where a particular form of word....
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....and as the acquisition proceedings were over by the order of the Competent Authority passed on 31.3.1981. The Full Bench observed that the pendency of the proceeding before the Competent Authority was necessary for the applicability of the Circular and as no such proceedings were pending in this case, the Circular had no application. Consequently, the Full Bench declined to answer the question referred and directed the matter to be posted before the Division Bench for hearing. XXX 8. It is well settled that the word "Proceedings" shall include the proceedings at the appellate stage. It is sufficient to refer to the Judgement of this Court in Garikapati Veeraya V/s. N. Subiah Choudhry, AIR 1957 SC 540, wherein the Court said at page 553 :- "(i) That the legal pursuit of a remedy, suit appeal and second appeal are really but steps in a series of proceedings all connected by an intrinsic unity and are to be regarded as one legal proceedings." Hence we are unable to persuade ourselves to agree with the view expressed by the Full Bench of the High Court in the Judgement under appeal that the circular would apply only to proceedings pending before the ....
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....an existing law. Pending judicial proceedings based upon a statute cannot proceed after its repeal. This rule holds true until the proceedings have reached a final judgment in the court of last resort, for that court, when it comes to announce its decision, conforms it to the law then existing, and may therefore reverse a judgment which was correct when pronounced in the subordinate tribunal from whence the appeal was taken, if it appears that pending the appeal a statute which was necessary to support the judgment of the lower court has been withdrawn by an absolute repeal." 203. In view of above conspectus of law, it appears that the recommendations of the GST Council to omit Rule 96(10) prospectively would apply to all the pending proceedings and cases. However, the contention on behalf of the Revenue that the petitioners have filed these petitions challenging the validity of Rule 96(10) cannot be said to be pending proceedings is without any basis because the petitioners have also challenged the show cause 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 s....
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.... Bombay High Court has held as under: "47. In this batch of Petitions, for reasons that we will discuss elaborately hereafter, we are satisfied that the Petitioners are entitled to succeed on the ground that this is a case of omission or repeal of the impugned Rules without any savings clause to protect the pending proceedings. Besides, we are also satisfied that the provisions of Section 6 of the General Clauses Act are not attracted and therefore, relying upon these provisions, the pending proceedings can claim no immunity or protection. Therefore, it is quite unnecessary to determine the issue of the constitutionality of the impugned rules. 48. However, we wish to briefly record one of the controversies regarding the constitutionality of Rule 96(10) of the CGST Rules, which is not significantly different from Rule 89(4B) of the CGST Rules. The first Rule applies to exports and the second to imports. Both the Rules provide for certain safeguards to ensure that there is no overlap between taxes and refunds regarding specific exports and imports. 49. One of the contentions raised on behalf of some of the Petitioners was that Rule 96(10) of the CGST Rules ....
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....nding on the authorities and tribunals in the State of Maharashtra, such authorities and tribunals in the State of Maharashtra must proceed based on the law declared by the High Court, even of another State and quash the assessment and penalties under the provision already struck down. 53. In these matters, none of the learned Counsel appearing on behalf of the Respondents was able to make any statement regarding the challenge to the Kerala High Court's decision declaring Rule 96(10) of the CGST Rules as ultra vires and unconstitutional. The Uttarakhand High Court, in the case of M/s Shree Sai Vishwas Polymers (supra), has already taken cognisance of the Kerala High Court's decision and proceeded based on its unconstitutionality. The learned Counsel for the Respondents were also unable to make any statement about the challenge to the Uttarakhand High Court's decision. 54. In the case of Commissioner of Income-Tax Vs Thana Electricity Supply Ltd [1993 SCC OnLine BOM 591], another Coordinate Bench of this Court of this Court comprising Dr B P Saraf, J (as His Lordship then was) & UT Shah, J, however, after noticing the earlier decision in Godavari Devi S....
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.... October 2024, become vulnerable. The show cause notices could not have proceeded any further post the repeal or omission of the impugned Rules i.e. beyond 08 October 2024. In some petitions, the challenge is to orders made by adjudicating authorities before October 08, 2024. However, a challenge to such orders was raised and was pending either before the Appellate Authorities or this Court. In such circumstances, even such orders could not be regarded as final for them to be included in the expression "transactions past and closed. 67. In M/s Add Wrap Packaging Pvt Ltd (supra) the Division Bench of the Gujarat High Court has considered this aspect of the omission or repeal of these very impugned Rules on pending proceedings in some detail. The Division Bench held that the omission or repeal of the impugned Rules would affect pending proceedings/cases where final adjudication has not taken place. The Division Bench held that the omission of Rule 96-10 would apply to all the proceedings/cases/Petitions which are pending adjudication either before the High Court or before the adjudicating authorities and no further proceedings are required to be carried forward and the Petit....
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....the Appellate Authorities or challenges before this Court, thus not constituting "transactions past and closed"-are not preserved and will stand lapsed. 123. Accordingly, we quash and set aside the impugned show cause notices and the impugned orders in original. Furthermore, we also quash and set aside the orders refusing some of the Petitioners' applications for refund, restore those applications to the files of the relevant Authorities, and direct the Authorities to consider and dispose of such refund applications in light of the declaration made by us above regarding the omission and repeal of the impugned Rules. This process must be completed within four months of the date of this order's upload, after providing the Petitioners with a fair opportunity to be heard." 10. Recently, the Delhi High Court in the case of Vinayak International Housewares P. Ltd., Vs. Union of India and others - W.P.(C)3154/2023 and connected matters dated 20.11.2025 has held as under: "18. A conjoint reading of all the judicial precedents set out above leads to the following conclusions: (i) In the 54th meeting of the GST Council, the recommendation made is relevan....