Goodluck India Limited & Anr. Vs Union of India & Ors. (Supreme Court of India)
Omission of Rule 96(10) is also applied for the pending proceeding on the omission: Supreme Court of India
Summary: The Supreme Court considered whether the omission of sub-rule (10) of Rule 96 of the CGST Rules, 2017, by Notification No. 20/2024 with effect from 08.10.2024, applied to pending proceedings concerning refund of integrated tax paid on goods and services exported from India. The Court noted that Rule 96(10) had been omitted without a saving clause and that the GST Council’s recommendation described its operation as causing unnecessary complications without intended benefit. Relying on Kolhapur Canesugar Works Ltd v. Union of India, the Court observed that proceedings under an omitted rule can continue only where a provision permits their continuance or a statutory fiction creates such a mechanism. The Court further noted that the recommendation for prospective application was advisory and did not bind the rule-making authority. Since no saving or sunset clause had been introduced when Rule 96(10) was omitted, the Court held that the omission applied to pending proceedings. It found no reason to interfere with the High Court judgment and dismissed the appeals. The two assessee SLPs, SLP (C) No.24550 of 2025 and SLP(C) No.26411 of 2026, challenging the vires and validity of Rule 96(10), were dismissed as infructuous. The Registry was directed to circulate the order to High Courts for expeditious closure of related proceedings.
Background: – Rule 96(10) of CGST Rules 2017, prohibiting the refund of IGST paid on the Export of Goods, in certain specified conditions. However said rule was omitted by Central Goods and service tax (Second Amendment ) Rule 2024 w e f 08-10-2024.
In case of pending proceeding on the said date, some of the high court held that, Rule 96(10) of the Central Goods and Services Tax (CGST) Rules, 2017 to be applicable to every pending proceedings as on the date of its omission. So SLP is filed with Supreme court
Court observation
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.
sub-rule (10) of Rule 96 was omitted because it was ‘leading to unnecessary complications without any intended benefit being served’ (sic). 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.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
In the above batch, the challenge by the Union of India and the Department is against the impugned judgment having held the omission of Rule 96(10) of the Central Goods and Services Tax (CGST) Rules, 2017 to be applicable to every pending proceedings as on the date of its omission. In two SLPs by the assesses, numbered as SLP (C) No.24550 of 2025 and SLP(C) No.26411 of 2026 the challenge is against the very vires and validity of Rule 96(10), which the High Court had refused to consider, since it was applied to all pending proceedings. In the nature of the orders to be passed by us, the two SLPs referred to hereinabove are dismissed as infructuous.
2. Leave granted in the rest of the matters.
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.
4. Sri S. Dwarakanath, learned ASG took us to the minutes of the 54thmeeting of the GST Council held on 09th September, 2024 at New Delhi, fairly conceding that the recommendation is only advisory and it is not mandatory to accept it. In any event the recommendation reads as under, insofar as the omission of Rule 96(10) is concerned:
“The Law Committee observed that operation of rule 96(10) is leading to unnecessary complications without any intended benefit being served and therefore recommended that rule 96(10), rule 89(4A) & rule 89(4B) of the CGST Rules, 2017 may be omitted with prospective effect and that consequential amendments in clause (b) of sub-rule (4B) of rule 86, clause B, clause C and clause E of sub-rule (4) of rule 89 and Explanation (a) to sub-rule (5) of rule 89 of CGST Rules may be made.”
The emphasis on the recommendation is to persuade us to apply it prospectively only, as the Council visualised it, in so far as its application is concerned.
5. The learned Senior Counsel appearing for the respondents on the other hand, relies on Kolhapur Canesugar Works Ltd v. Union of India1. Therein the question raised was the refund demanded under Rule 10A of the Central Excise Rules, 1944, which though prevalent at the time of issuance of show cause notice, before the final order was passed, it stood omitted. The newly brought in rule did not have provision for enforcing such refund. It was argued for the Department that the introduction of Section 11A, created a fiction by virtue of which proceedings under Rule 10 are deemed to be proceedings under Rule 11A of the Act. The trite principle in common law that the effect of repealing a statute or deleting a provision, is to obliterate it from the statute book, as completely as if it had never existed was highlighted by this Court. An exemption, as engrafted by the provisions of Section 6 of the General Clauses Act; though Section 6 was held to be not applicable in the given circumstances of omission of a rule, should have been incorporated as a saving clause to facilitate continuance of pending proceedings despite the omission, failing which all actions would come to a stop when the omission is given effect. It was held so under paragraph 36
“36. In the case in hand Rule 10 or Rule 10-A is neither a “Central Act” nor a “regulation” as defined in the Act. It may be a Rule under Section 3(51) of the Act. Section 6 is applicable where any Central Act or regulation made after commencement of the General Clauses Act repeals any enactment. It is not applicable in the case of omission of a “rule”.
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.
9. The Registry is directed to send a copy of this order to all the High The Registry of the High Courts will ensure that the cases relating to the subject issue of omission of Rule 96(10) would be placed before the Courts having roster, after taking appropriate orders from the Hon’ble Chief Justice of the respective High Courts, expeditiously to bring quietus in the subject litigation.
10. The appeals are dismissed.
11. Pending application(s), if any, shall stand disposed of.
Note:
1 (2000) 2 SCC 536
