The Andhra Pradesh High Court has set aside orders directing recovery of GST refunds holding that proceedings initiated under the omitted Rule 96(10) of the CGST Rules, 2017 cannot continue in the absence of a statutory saving clause.
The Bench of Justice R. Raghunandan Rao and Justice T.C.D. Sekhar has observed that although the appellate order had been passed before the omission, the writ petition challenging the recovery remained pending after Rule 96(10) had been deleted. Since the proceedings were still alive before the High Court, the benefit of the earlier Division Bench ruling applied to the present case as well.
The petitioner had claimed and received GST refunds under the applicable provisions. Subsequently, the GST department issued a show cause notice dated December 9, 2022 alleging violation of Rule 96(10) of the CGST Rules, 2017 and initiated proceedings to recover the refunds already sanctioned.
Following adjudication, the department passed an order on May 19, 2023 directing recovery of the refunded amount along with interest under Section 50 and penalty under Section 75 of the CGST Act. The appellate authority affirmed the demand through an order dated February 5, 2024, prompting the company to approach the High Court under Article 226 of the Constitution.
The principal question before the High Court was whether proceedings initiated under Rule 96(10) could survive after the rule itself was omitted with effect from October 8, 2024 without any saving clause preserving pending or past proceedings.
The petitioner argued that once Rule 96(10) ceased to exist and the omission contained no saving provision, every action founded solely upon that rule automatically became legally unsustainable. The company relied upon an earlier Division Bench judgment of the Andhra Pradesh High Court dated January 21, 2026, which had already held that proceedings initiated under the omitted rule could not continue.
The tax department contended that the adjudication proceedings had already been completed before Rule 96(10) was omitted. According to the department, since the original and appellate orders had been passed before the omission, the subsequent deletion of the rule should not invalidate completed proceedings.
Rejecting the department’s argument, the Division Bench held that its earlier judgment had categorically declared that once Rule 96(10) was omitted without any saving clause, it had to be treated as non-existent in law, and proceedings founded exclusively upon it could not survive.
Allowing the writ petition, the High Court set aside the original assessment and recovery order dated May 19, 2023; quashed the appellate order dated February 5, 2024; permitted the petitioner to seek refund of the pre-deposit amount made during the litigation; and closed all pending miscellaneous applications without imposing costs.
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