GST Demands Under Omitted Rule 96(10) Quashed: Allahabad HC

Saran Impex Vs State of U.P. (Allahabad High Court)

Summary: The Allahabad High Court, comprising Justice Saumitra Dayal Singh and Justice Swarupama Chaturvedi, allowed seven connected writ petitions, including Saran Impex Vs State of U.P., challenging GST proceedings initiated under Sections 73 and 74 of the Central Goods and Services Tax Act, 2017 on the basis of Rule 96(10) of the CGST Rules, 2017. The petitions related to different financial years, ranging from 2018-19 to 2023-24, and questioned the continuation of statutory proceedings after the rule had been omitted. The Court delivered its decision on 30 September 2026, setting aside the impugned adjudication notices and orders.

The central issue concerned the legal consequences of the omission of Rule 96(10) by Notification No. 20/2024-Central Tax dated 8 October 2024. The provision had restricted refunds of integrated goods and services tax paid on exports in circumstances involving specified exemption benefits. The petitioners contended that proceedings based exclusively on this restriction could no longer continue where adjudication had not reached finality before its omission. Their challenge was founded on the statutory effect of deleting the rule without incorporating a saving provision preserving pending proceedings.

The petitioners relied on the Supreme Court’s decision in Goodluck India Ltd. Vs Union of India, reported as (2026) 189 Taxmann.com 330 (SC). In that decision, the Supreme Court had affirmed the Gujarat High Court’s judgment in Addwrap Packaging Pvt. Ltd. Vs Union of India, reported as (2025) 31 Centax 274 (Guj.). The Supreme Court considered whether the omission of Rule 96(10) benefited taxpayers involved in pending IGST refund proceedings, particularly where the earlier restriction had denied refund eligibility to exporters receiving supplies under specified concession notifications.

The Supreme Court had applied its earlier Constitution Bench ruling in Kolhapur Canesugar Works Ltd. Vs Union of India, (2000) 2 SCC 536. The principle considered was that proceedings initiated under an omitted rule may continue only where a saving provision or another legally recognised statutory mechanism preserves them. The Supreme Court observed that Rule 96(10) had been omitted without any saving clause or sunset clause and that the recommendation for prospective omission was advisory rather than binding on the rule-making authority. Accordingly, the omission applied to proceedings pending when the rule ceased to operate.

The Allahabad High Court also recorded an important administrative development. The Revenue admitted that the Supreme Court’s decision had been given effect through a CBIC Office Memorandum dated 24 August 2026. This demonstrated the administration’s acceptance of the judicial position concerning proceedings based on the omitted rule. The Court treated the issue as fully covered by the binding Supreme Court decision and found that no surviving dispute required further adjudication in the petitions before it.

The batch included petitions filed by Saran Impex, M/s A.G. Industries, M/s Swadeshi Agencies, M/s S K Shoes and Boots Pvt. Ltd. and M/s S.K. Exports. The impugned notices were issued between June 2025 and August 2026, with the schedule reproduced in the order identifying notices under Section 74 of the CGST Act. Since these proceedings were initiated after the omission and were founded on Rule 96(10), the Court applied the legal position established by the Supreme Court without undertaking an independent examination of the constitutional validity of the omitted rule.

Consequently, the Allahabad High Court allowed all seven writ petitions and quashed the individual adjudication notices and orders. The ruling reinforces the effect of the Supreme Court’s decision that, in the absence of statutory saving provisions, pending GST proceedings cannot be sustained merely by invoking an omitted subordinate legislative restriction. The Court made no order as to costs. The judgment provides relief in respect of the impugned proceedings; it does not itself quantify or sanction any export refund. Any separate entitlement to refund must be determined under the applicable statutory framework.

Cases Discussed

1. Goodluck India Ltd. Vs Union of India — (2026) 189 Taxmann.com 330 (SC); Supreme Court; 06/08/2026. The Court relied on this binding decision holding that the omission of Rule 96(10), without a saving clause, applies to pending proceedings and prevents further continuation of proceedings founded on the omitted restriction.

2. Addwrap Packaging Pvt. Ltd. Vs Union of India — (2025) 31 Centax 274 (Guj.); Gujarat High Court; 13/06/2025. The Gujarat High Court judgment on the application of the omitted rule to pending proceedings was affirmed by the Supreme Court in Goodluck India.

3. Kolhapur Canesugar Works Ltd. Vs Union of India — (2000) 2 SCC 536; Constitution Bench, Supreme Court. Relied upon for the proposition that continuation of proceedings under an omitted rule requires an appropriate saving provision or statutory mechanism.

FULL TEXT OF THE JUDGMENT OF ALLAHABAD HIGH COURT

1. Heard Sri Nishant Mishra alongwith Ms. Vedika Nath, Ms. Yashika Singh, Sri Dhruv Pratap Singh holding brief of Sri Tanmay Sadh, Sri Namit Kumar Sharma, Sri Yashonidhi Shukla learned counsel for the petitioners, Sri Dhananjay Awasthi, Sri Gaurav Mahajan, Sri Parv Agarwal, Sri Amit Mahajan and Sri Krishna Agarwal learned counsel for CBIC.

2. Present set of petitions has been filed, primarily to assail proceedings initiated under Section 73 and 74 of the CGST Act, 2017 – on the strength of Rule 96(10) of the CGST Rules 2017 (hereinafter referred to as ‘the Rules’), for various tax periods. Those details are contained in the table below:

3. The common grounds pressed in the writ petitions being that the Rule 96(10) of the Rules was omitted by the Central Government vide Notification No. 20/2024-Central Tax, dated 08.10.2024 with effect from 08.10.2024.

4. To the extent the impugned proceedings had not been concluded upto the date of omission of Rule 96(10) of the Rules, same do not have legs to stand. Reliance has been placed on a decision of the Supreme Court in Goodluck India Ltd. vs. Union of India (2026) 189 Taxmann.com 330 (SC). By that order, the Supreme Court has affirmed the order of the Gujarat High Court in Addwrap packaging Pvt. Ltd. vs. Union of India (2025) 31 Centax 274 (Guj.). In relevant parts, the issue involved in Goodluck India Ltd. (supra) has been noticed as below:

“3. The issue arising is whether sub-rule (10) of Rule 96 as omitted by Notification No.20/2024 with effect from 08.10.2024 would inure to the benefit of the assessee in the pending proceedings, wherein there was a claim of refund of integrated tax paid on goods and services exported out of India, to be considered without the restriction under sub-rule (10) being applied. The sub-rule having been omitted, suffice it to notice that the applicability of refund under Rule 96 was without the rigor of the person claiming such refund, having received supplies after availing benefits available by virtue of the notifications specified in clause (a) or the benefits available under the notifications specified under clause (b). The sub-rule having been omitted without a saving clause it applies squarely to all the proceedings pending, is the contention of the assessees, which was sought to be resisted by the learned Additional Solicitor General appearing for the Union of India.”

(emphasis supplied)

5. As to reasoning, the Supreme Court has relied on its earlier Constitution Bench decision in Kolhapur Canesugar Works Ltd. Vs Union of India (2000) 2 SCC 536 and thereafter observed as below:

“6. It was held by the Constitution Bench that if on omission of a rule, there was a provision for continuance of the proceedings already initiated or if by incorporation of a provision in the statute there was a legal device adopted, creating a fiction by virtue of which proceedings under the omitted rule could be continued; only then proceedings initiated under the omitted rule could be continued.

7. The Constitution Bench decision applies squarely in the above case. We may also observe that even going by the recommendations as extracted hereinabove, sub-rule (10) of Rule 96 was omitted because it was ‘leading to unnecessary complications without any intended benefit being served’ (sic). As fairly submitted by the learned ASG the legislature has not brought in any saving clause or a sunset clause, when sub-rule (10) of Rule 96 was omitted. The recommendation that the omission should be prospective is also advisory in nature and does not bind the rule making authority. The intention to omit the rule without any saving clause was to bring to an end, the unnecessary complications once and for all and the intention cannot be to keep alive the unnecessary complications insofar as the pending proceedings are concerned.

8. We find no good reason to interfere with the well-reasoned judgment of the High Court. We are told that there are many proceedings pending before the various High Courts and conflicting decisions have also been passed. We hope that such proceedings would get closure with this judgment.”

6. It is also admitted to the revenue that the order of the Supreme Court has been given full effect by issuance of Office Memorandum dated 24.08.2026, by the CBIC.

7. To the extent the issue involved is squarely covered by the decision of the Supreme Court in Goodluck India Ltd. (supra), no lis survives for any other adjudication. Accordingly, all writ petitions are allowed. The individual adjudication notices and orders are quashed. No order as to costs.