Case at a Glance
Rule 96(10) of the CGST Rules, 2017, which restricted certain refunds of integrated tax paid on exports, was omitted by Notification No. 20/2024 with effect from 8 October 2024, without any saving clause. A High Court held that the omission applies to every refund proceeding pending on that date, and the Union of India appealed in a large batch of cases. Relying on the Constitution Bench in Kolhapur Canesugar Works Ltd. v. Union of India, (2000) 02 SC CK 0017, the Supreme Court held that the omission of a rule obliterates it, that Section 6 of the General Clauses Act does not save proceedings under an omitted rule, and dismissed the Centre’s appeals, directing High Courts to dispose of similar cases expeditiously.
Rule 96(10) of the Central Goods and Services Tax Rules, 2017 placed a restriction on refunds of integrated tax paid on goods and services exported. At its 54th meeting on 9 September 2024, the GST Council’s Law Committee recommended omitting Rule 96(10), Rule 89(4A) and Rule 89(4B) “with prospective effect”. Notification No. 20/2024 then omitted Rule 96(10) with effect from 8 October 2024, but enacted no saving or sunset clause for pending proceedings.
A High Court held that the omission applies to all proceedings pending when it took effect, so pending refund claims had to be considered without the sub-rule (10) restriction. The Union of India and its department appealed in a large batch. Separately, some assessees, including M/s Goodluck India Limited, had challenged the vires of Rule 96(10) itself, an issue the High Court did not need to decide. The Supreme Court order does not name the High Court or set out the amounts involved.
The Key Question Before the Court
Does the omission of Rule 96(10) of the CGST Rules by Notification No. 20/2024, without a saving clause, benefit exporters whose refund proceedings were pending on 8 October 2024?
Omission Means Obliteration, Absent a Saving Clause
The Union, through the Additional Solicitor General, relied on the GST Council minutes recommending prospective omission, while conceding that the recommendation was not mandatory. The Court noted that the Council’s recommendation is advisory and does not bind the rule-making authority, and the ASG also conceded that no saving or sunset clause had been enacted. The respondents relied on the Constitution Bench decision in Kolhapur Canesugar Works Ltd. v. Union of India, which concerned the omission of Rule 10A of the Central Excise Rules, 1944.
Following Kolhapur Canesugar, the Court explained that “the effect of repealing a statute or deleting a provision” is to obliterate it, and that Section 6 of the General Clauses Act, 1897 does not apply to the omission of a rule. Proceedings under an omitted rule can continue only if there is a provision for their continuance or a statutory device creating such a fiction, and there was none here. The omission was meant to end unnecessary complications, and “the intention cannot be to keep alive the unnecessary complications insofar as the pending proceedings are concerned.” The Court found “no good reason to interfere with the well-reasoned judgment of the High Court.”
What the Court Actually Held
- A GST Council recommendation that an omission operate prospectively is advisory and does not bind the rule-making authority.
- Following Kolhapur Canesugar Works Ltd. v. Union of India, omission of a rule obliterates it, and Section 6 of the General Clauses Act does not save pending proceedings under an omitted rule.
- As no saving clause was enacted, the omission of Rule 96(10) with effect from 8 October 2024 applies to all refund proceedings pending on that date.
- The Union’s appeals were dismissed; the assessees’ vires challenges were dismissed as infructuous; the Registry was directed to send the order to all High Courts for expeditious listing of similar cases.
Why This Judgment Matters
- Exporters with refund claims pending on 8 October 2024 can seek processing without the Rule 96(10) restriction.
- It reaffirms that tax authorities cannot rely on GST Council minutes to supply a saving clause that the notification itself does not contain.
- The direction to all High Courts is aimed at bringing quietus to a large volume of pending litigation on the same issue.
What Should Advocates Take Away From the Judgment?
For Exporters and Taxpayers
- If your IGST export refund was pending on 8 October 2024 and was held up under Rule 96(10), cite this judgment to seek its processing without that restriction.
- Check whether your matter is pending in a High Court; the Supreme Court asked High Courts to list such cases expeditiously.
For Counsel
- Rely on Kolhapur Canesugar Works Ltd. v. Union of India and this order on the effect of omitting a rule without a saving clause.
- Answer reliance on GST Council minutes by pointing out that the Court treated the recommendation as advisory.
- The order is non-reportable but disposes of a large batch and was directed to be circulated to all High Courts.
Key Takeaways
- Rule 96(10) CGST Rules omitted from 8 October 2024 by Notification No. 20/2024.
- No saving clause means pending proceedings get the benefit of the omission.
- Section 6 General Clauses Act does not apply to omission of a rule.
- Centre’s appeals dismissed; High Courts to dispose of similar cases quickly.
Frequently Asked Questions
What did the Supreme Court decide about Rule 96(10) of the CGST Rules?
It upheld a High Court ruling that the omission of Rule 96(10), effective 8 October 2024, applies to all refund proceedings pending on that date, because no saving clause was enacted.
Does Section 6 of the General Clauses Act save pending proceedings?
Not for omission of a rule. Following Kolhapur Canesugar Works Ltd. v. Union of India, the Court held that Section 6 does not apply to the omission of a rule, and proceedings continue only if a provision or statutory device provides for it.
Did the GST Council’s recommendation for prospective effect matter?
No. The Court noted that the GST Council’s recommendation is advisory and does not bind the rule-making authority, and the notification itself contained no saving clause.
Conclusion
Goodluck India Limited v. Union of India settles a recurring dispute in GST export refunds in favour of exporters with pending claims. Once Rule 96(10) was omitted without a saving clause, the department could not keep applying it to cases still under process.
Practical takeaway: Exporters and their advisers should identify refund claims pending on 8 October 2024 that were affected by Rule 96(10) and pursue them on the basis of this ruling.
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