No se puede emitir ninguna orden invocando la Regla 96(10) tras su omisión a partir del 08.10.2024

Held by Hon’ble High Court of Uttarakhand at Nainital

En el asunto de

M/s Sri Sai Vishwas Polymers Versus Union of India and Another

(Writ Petition (MB) No. 103 of 2025)

The Petitioner is a partnership Firm engaged in the manufacturing of Gold bars and jewellery. During the audit, it was found that the petitioner had claimed a refund of INR 1.05 Crores under GST. Accordingly, the Respondent issued a show Cause Notice under section 74(1) of the CGST Act, requiring the petitioner to show cause why the alleged inadmissible/ erroneous refund amount should not be recovered along with interest and penalty according to Rule 96(10) of the CGST Rules. The Petitioner furnished a detailed response against the SCN. However, the Respondent confirmed the demand without considering the submission vide order dated 03.02.2025. 

The Provisions of Rule 96(10) were omitted vide Notification No. 20/2024 – Central Tax dated 08-10-2024 w.e.f. 08-10-2024.

The Petitioner contended that The Proceedings were initiated based on the allegation of contravention of provisions of Section 96(10) of CGST Rules. Once the Rule is omitted w.e.f. 08.10.2024, the proceeding initiated by the respondents could not have been continued further.

Hon’ble High Court held that In case of omission of rule, if a provision of a statute is omitted unconditionally without a saving clause in favour of pending proceeding, all actions must stop where the omission finds them, and if the final relief has not been granted before the omission goes into effect, it cannot be granted afterwards. In the given case, Rule 96(10) has been omitted without any saving clause. Considering the absence of a saving clause in favour of the pending proceedings, all actions from the date of such omission of the rule must stop. Accordingly, there is no scope for the Respondent to pass any order by invoking the provisions of rule 96(10) of the CGST Rule, 2017, after the same was omitted on 08.10.2024 without a saving clause in favour of the pending proceeding.  Accordingly, the writ petition is allowed and the impugned order is set aside.

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1. Brief Facts of the Case:

• M/s Sri Sai Vishwas Polymers (“The Petitioner”) is a Partnership Firm engaged in the manufacturing of Gold Bar and Jewellery, etc.
• The Petitioner is claiming Input Tax Credit (“ITC”) on inward supplies of goods or services and charging CGST, SGST and IGST on outward supplies;
• The Department conducted an audit of the petitioner, wherein it appeared that the petitioner had claimed a refund of INR 1.05 Crores under the IGST.
• The Department issued the Show Cause Notice (“SCN”) under Section 74(1) of the IGST Act to the petitioner requiring him to show cause why the alleged inadmissible/erroneous refund amount should not be recovered along with interest and penalty;
• The Petitioner furnished a detailed response against SCN. However, the Respondent confirmed the alleged demand without considering the submissions of the petitioner vide order dated 03.02.2025. 
• Therefore, the petitioner filed the writ petition.

2. Relevant Legal Extract

Relevant Provisions of the GST Law are reiterated below for ready reference:

Rule 96(10) of the CGST Rules is reiterated below:

“Rule 96 - Refund of integrated tax paid on goods or services exported out of India

…

(10) The persons claiming a refund of integrated tax paid on exports of goods or services should not have -

(a) received supplies on which the benefit of the Government of India, Ministry of Finance Notification No. 48/2017-Central Tax, dated the 18th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i), vide number GSR 1305(E), dated the 18th October, 2017 except so far it relates to receipt of capital goods by such person against Export Promotion Capital Goods Scheme or Notification No. 40/2017-Central Tax (Rate), dated the 23rd October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number GSR 1320(E), dated the 23rd October, 2017 or Notification No.41/2017-Integrated Tax (Rate), dated the 23rd October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number GSR 1321(E), dated the 23rd October, 2017 has been availed; or

(b) availed the benefit under Notification No. 78/2017-Customs, dated the 13th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number GSR 1272(E), dated the 13th October, 2017 or Notification No. 79/2017-Customs, dated the 13th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number GSR 1299(E), dated the 13th October, 2017 except so far it relates to receipt of capital goods by such person against Export Promotion Capital Goods Scheme.

[Explanation: For this subrule, the benefit of the notifications mentioned therein shall not be considered to have been availed only where the registered person has paid Integrated Goods and Services Tax and Compensation Cess on inputs and has availed exemption of only Basic Customs Duty (BCD) under the said notifications.]"

The Provisions of Rule 96(10) were omitted vide Notification No. 20/2024 – Central Tax dated 08-10-2024 w.e.f. 08-10-2024.

3. Argumentos del Peticionario:

El Peticionario sostuvo que:

• Although the proceedings were initiated and the show cause Notice was issued and served on the Petitioner within the validity of the said rules, however, before the final order came into existence, rule 96(10) of the CGST Rules stood omitted.
• Further, as per Apex Court in the matter of Kolhapur Canesugar Works Ltd. & Anr., v. Union of India & Ors., reported in (2000) 2 SCC 536 has held that once a rule is omitted, ordinarily as a consequence thereof, the provision is to be obliterated from the statute book as completely as if it had never been passed, and the statute must be considered as if the rule had never existed.
• The Proceedings through SCN were initiated based on the allegation of contravention of provisions of Section 96(10) of CGST Rules.
• Once the Rule is omitted w.e.f. 08.10.2024, the proceeding initiated by the respondents could not have been continued further.
• Accordingly, the Impugned order is liable to be set aside.

4. Alegaciones del recurrido

El recurrido alegó lo siguiente:

• At the time of issuance of SCN, Rule 96(10) was in existence.
• Therefore, deletion of Rule 96 (10) w.e.f. 08.10.2024 would operate prospectively, where proceedings initiated during the subsistence of the rule would continue to be governed by the said rules.

5. Findings and Analysis by the Hon’ble High Court

El Tribunal Superior emitió las siguientes conclusiones y análisis:

• Dado que la Regla 96(10) ya ha sido declarada ultra vires por el Tribunal Superior de Kerala y posteriormente eliminada, no tendría sentido declararla nuevamente ultra vires respecto a la Sección 16 de la Ley CGST.

• Además, la siguiente cuestión a considerar es si el Demandado es competente para dictar una orden tras la omisión de dicha Regla. En el caso presente, la Regla 96(10) fue omitida a partir del 08.10.2024 y la orden impugnada se emitió el 30.01.2025.

• En el asunto de Kolhapur Canesugar Works Ltd. (supra), se sostuvo que el efecto de la omisión de una regla es distinto al efecto de la sustitución de una regla y al efecto de la enmienda de un estatuto, el cual está protegido por una cláusula de salvaguarda.

• En caso de omisión de una regla, si una disposición de un estatuto se omite incondicionalmente sin una cláusula de salvaguarda a favor de un procedimiento pendiente, todas las acciones deben detenerse en el estado en que la omisión las encuentre, y si no se ha concedido la reparación definitiva antes de que la omisión entre en vigor, no podrá concederse posteriormente.

• Por lo tanto, la aplicación de la derogación o eliminación respecto al futuro y al pasado depende en gran medida de la cláusula de salvaguarda.

• Del mismo modo, si se inserta una nueva disposición en lugar de la anterior sin una cláusula de salvaguarda a favor de los procedimientos pendientes, se puede inferir razonablemente que el legislador pretende que los procedimientos pendientes no continúen, sino que se inicien nuevos procedimientos bajo la nueva disposición.

• En el caso presente, no se ha incorporado ninguna regla nueva en lugar de la Regla 96(10) de las Reglas CGST. Más bien, la Regla 96(10) ha sido omitida sin ninguna cláusula de salvaguarda; al menos, las partes en esta etapa no han podido demostrar lo contrario.

• Considerando la ausencia de una cláusula de salvaguarda a favor de los procedimientos pendientes, todas las acciones deben detenerse a partir de la fecha de dicha omisión de la regla.

• En consecuencia, no existe margen para que el Demandado dicte ninguna orden invocando las disposiciones de la regla 96(10) de las Reglas CGST de 2017, después de que esta fuera omitida el 08.10.2024 sin una cláusula de salvaguarda a favor del procedimiento pendiente.

Orden final

La Regla 96(10) ha sido omitida en el caso presente

• No existe margen para que el Demandado dicte ninguna orden invocando las disposiciones de la regla 96(10) de las Reglas CGST de 2017, después de que esta fuera omitida el 08.10.2024 sin una cláusula de salvaguarda a favor del procedimiento pendiente.
• En consecuencia, se admite el recurso de amparo y se anula la orden impugnada.