Supreme Court Clarifies Retrospective Applicability of Omission of Rule 96(10) CGST Rules to All Pending Refund Proceedings

Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 11.08.2026

Supreme Court Clarifies Retrospective Applicability of Omission of Rule 96(10) CGST Rules to All Pending Refund Proceedings

The Supreme Court of India recently delivered a significant judgment addressing the legal consequences of omitting Rule 96(10) of the Central Goods and Services Tax (CGST) Rules, 2017. This rule previously imposed restrictions on exporters claiming refunds of integrated tax paid on exported goods and services. The omission of this rule by Notification No. 20/2024, effective from October 8, 2024, led to widespread litigation regarding its impact on refund claims that were still pending at the time of omission.

The Legal Challenge

Multiple appeals were filed before the Supreme Court, both by the Union of India and by affected assessees. The central issue was whether the omission of Rule 96(10) should benefit exporters in all pending refund proceedings, or whether the restriction should continue to apply to cases initiated before the rule was omitted.

Key Legal Principles Applied

1. Effect of Omission Without a Saving Clause
   • The Court relied on the principle that when a statutory rule is omitted without a saving clause, it is treated as if it never existed for pending proceedings. This principle was drawn from the precedent set in Kolhapur Canesugar Works Ltd v. Union of India (2000), where it was held that omission of a rule, unless accompanied by a saving clause, brings all actions under that rule to a halt.
   • Section 6 of the General Clauses Act, which allows for continuation of proceedings after repeal, does not apply to the omission of a rule unless specifically provided.
2. Advisory Nature of GST Council Recommendations
   • The GST Council had recommended that the omission of Rule 96(10) be applied prospectively. However, the Court clarified that such recommendations are advisory and not binding on the rule-making authority.
3. Legislative Intent
   • The omission was intended to remove unnecessary complications, and the absence of a saving clause indicated the intent to end such complications for all pending cases.

The Supreme Court’s Final Decision

• Dismissal of Appeals: The Supreme Court dismissed the appeals, upholding the High Court’s decision that the omission of Rule 96(10) applies to all pending proceedings.
• Application to Pending Proceedings: All pending refund claims under Rule 96 are to be considered without applying the restrictions of the omitted sub-rule (10), since there is no saving clause to preserve its effect.
• Uniform Closure of Cases: The Court directed the Registry to circulate the order to all High Courts to ensure uniform closure of similar pending cases, bringing an end to conflicting decisions across different jurisdictions.

Implications for Exporters and Tax Authorities

• For Exporters: Exporters with pending refund claims as of October 8, 2024, will benefit from the omission of Rule 96(10). Their claims will be processed without the restrictions previously imposed by the rule.
• For Tax Authorities: Tax authorities must process all pending refund claims without invoking the omitted rule, ensuring consistency and legal certainty.

Conclusion

The Supreme Court’s judgment provides much-needed clarity and finality on the applicability of omitted GST rules to pending proceedings. By affirming that the omission of Rule 96(10) applies retrospectively to all pending cases, the Court has ensured a uniform and fair approach for all stakeholders involved in GST refund litigation.

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Source: Supreme Court

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