India’s Supreme Court has ruled that the omission of Rule 96(10) of the GST Rules applies to ongoing refund cases, providing relief to exporters and resolving legal ambiguities regarding pending IGST refunds.
India’s Supreme Court has ruled that the omission of Rule 96(10) of the Central Goods and Services Tax Rules applies to refund cases that were still pending when the provision was withdrawn, giving relief to exporters seeking integrated goods and services tax refunds. The court said the purpose of removing the rule without a saving clause was to end the difficulties it had created, not to preserve them for unresolved disputes.
The decision matters for exporters who claimed refunds of IGST paid on outbound supplies and were blocked by the now-omitted rule. Rule 96(10) had restricted refunds in cases where businesses had used certain tax benefits on their inputs, a restriction that had long drawn criticism for complicating the export refund process. The Kerala High Court had already held the rule to be ultra vires section 16 of the IGST Act and manifestly arbitrary, while the Supreme Court has also previously declined to interfere in a Gujarat High Court ruling that allowed a refund despite a return-filing error, signalling judicial concern over denying exporters refunds on technical grounds.
In the case before the apex court, the Union government argued that the omission of Rule 96(10) through Notification No. 20/2024 should operate only prospectively, relying on minutes of the GST Council’s 54th meeting that described the proposed change as prospective. But the bench said the earlier Constitution Bench ruling in Kolhapur Canesugar Works Ltd v. Union of India makes clear that when a rule is omitted, proceedings under it do not continue unless Parliament or the rules themselves preserve them through a saving clause or legal fiction.
Finding no such provision here, the court held that proceedings started under the omitted rule could not survive. It declined to interfere with the High Court’s order, quashed the appeals and asked High Courts to dispose of similar matters in line with its ruling. For exporters, the judgment removes a major source of uncertainty over pending IGST refund claims and strengthens the view that the withdrawn restriction should no longer be used against cases still awaiting final decision.
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