ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 03.12.2025
High Court of Delhi Quashes Proceedings Under Rule 96(10) of CGST Rules
This Article has been written by Shri Ravi Shekhar Jha, Advocate based in New Delhi. The views expressed are based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
In a landmark judgment delivered on November 20, 2025, the High Court of Delhi addressed the constitutional validity and implications of Rule 96(10) of the Central Goods and Services Tax (CGST) Rules, 2017. The judgment, authored by Justice, has significant ramifications for exporters seeking refunds under the Integrated Goods and Services Tax (IGST) framework. The Court quashed proceedings initiated under Rule 96(10) in three separate writ petitions, marking a pivotal moment in GST jurisprudence.
Background
Rule 96(10) of the CGST Rules imposed restrictions on exporters claiming IGST refunds, creating complications for businesses availing exemptions under specific notifications. The rule was challenged by various petitioners, including M/s Vinayak International Housewares Pvt Ltd, M/s Ashish Foils Pvt Ltd, and M/s Mayedass International, who argued that the rule was unconstitutional and contrary to Section 16 of the IGST Act, 2017.
The GST Council, in its 54th meeting, recommended the omission of Rule 96(10), citing its unnecessary complexity and lack of intended benefits. Subsequently, Notification No. 20/2024 was issued on October 8, 2024, officially omitting the rule. However, the omission was deemed prospective, leading to disputes over its applicability to pending proceedings.
Key Observations by the Court
- Constitutional Validity of Rule 96(10): The Court referred to the Kerala High Court’s decision in Sance Laboratories Pvt. Ltd. vs. Union of India, which declared Rule 96(10) unconstitutional for imposing restrictions not contemplated under Section 16 of the IGST Act. The Delhi High Court concurred, emphasizing that the rule created arbitrary constraints on IGST refunds.
- Impact of Omission: The Court relied on precedents, including the Supreme Court’s judgment in Kolhapur Canesugar Works Ltd., to conclude that the omission of Rule 96(10) applies to all pending proceedings. It held that unless transactions are “past and closed,” the benefit of the rule’s omission must extend to ongoing cases.
- Quashing of Proceedings:
- In W.P.(C) 3154/2023, the Court quashed summons issued to M/s Vinayak International Housewares Pvt Ltd, ruling that no proceedings could continue under the omitted rule.
- In W.P.(C) 10687/2023, the Court quashed show cause notices (SCNs) and subsequent orders against M/s Ashish Foils Pvt Ltd.
- In W.P.(C) 3165/2023, the Court quashed SCNs and proceedings against M/s Mayedass International.
Implications for Exporters
This judgment is a significant relief for exporters who faced hurdles in claiming IGST refunds due to Rule 96(10). The Court’s decision ensures that the omission of the rule applies retrospectively to all pending proceedings, including SCNs, orders, and appeals. Exporters can now claim refunds without the constraints imposed by the rule, simplifying the refund process and aligning it with the intent of the GST framework.
Conclusion
The Delhi High Court’s judgment underscores the importance of judicial scrutiny in ensuring that tax regulations do not impose arbitrary restrictions on businesses. By quashing proceedings under Rule 96(10), the Court has upheld the principles of fairness and simplicity in the GST regime. This decision is a welcome development for exporters and sets a precedent for similar cases across the country.
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Source: Delhi High Court
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