The Allahabad High Court has set aside GST adjudication and appellate orders holding that proceedings founded on the omitted Rule 96(10) of the Central Goods and Services Tax Rules, 2017, stood vitiated in light of the Supreme Court’s ruling and the Central Board of Indirect Taxes and Customs’ subsequent clarification.
The bench of Justice Vikas Budhwar passed the order while deciding the company’s challenge to proceedings under Section 74 of the Uttar Pradesh GST and Central GST Acts, 2017.
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The dispute centred on whether tax authorities could sustain orders relying on Rule 96(10) after its omission without a saving clause preserving pending proceedings.
The petitioner, a GST-registered private limited company with two factories in Noida, challenged an adjudication order dated December 31, 2024, passed by the Deputy Commissioner, UPGST, Noida-14, Gautam Budh Nagar.
The proceedings concerned financial years 2019-20, 2020-21, 2021-22, 2022-23 and 2023-24 and relied on Rule 96(10) of the CGST Rules.
The company pursued appeals concerning financial years 2022-23 and 2023-24 before the Additional Commissioner Grade-II (Appeal), State Tax Department, Noida. Following dismissal of the appeals on May 5, 2026, it approached the High Court challenging the adjudication and appellate orders.
The central legal issue was the effect of omitting Rule 96(10), which imposed restrictions on refunds of integrated tax paid on exports where specified benefits under certain notifications had been availed.
The provision was omitted through Notification No. 20/2024-Central Tax dated October 8, 2024, with effect from that date.
The petitioner argued that the impugned orders could not survive after the omission. It relied on the Allahabad High Court’s Division Bench ruling in Saran Impex and Another v. State of U.P. and Another, which had followed the Supreme Court’s decision in Goodluck India Limited v. Union of India.
The petitioner also referred to CBIC’s communication dated August 24, 2026, accepting the legal position arising from the Supreme Court’s judgment.
The State’s standing counsel did not dispute the legal proposition advanced by the company.
The High Court reproduced the relevant findings in Saran Impex, where a batch of petitions challenged proceedings initiated under Sections 73 and 74 on the strength of Rule 96(10).
That Division Bench had applied the Supreme Court’s decision in Goodluck India, which affirmed the Gujarat High Court’s judgment in Addwrap Packaging Pvt. Ltd. v. Union of India.
As reproduced in the present judgment, the Supreme Court relied on the Constitution Bench decision in Kolhapur Canesugar Works Ltd. v. Union of India. The principle applied was that proceedings under an omitted rule could continue only where an express provision or another statutory mechanism preserved them.
For Rule 96(10), no saving clause or sunset clause accompanied the omission.
The Supreme Court also noted that the provision had been removed because it created unnecessary complications without serving the intended benefit. A recommendation that the omission should operate prospectively was advisory and did not bind the rule-making authority.
On that reasoning, the omission benefited proceedings pending on the date the rule was removed.
Applying this position, the Division Bench in Saran Impex had quashed the challenged adjudication notices and orders.
Justice Budhwar also reproduced CBIC’s Office Memorandum dated August 24, 2026, bearing reference F. No. CBIC-20010/21/2026-GST.
The memorandum recorded that the Supreme Court’s August 6, 2026 judgment in Goodluck India applied the omission of Rule 96(10) to all proceedings pending as on the date of omission, in the absence of a saving clause.
It further explained that Section 6 of the General Clauses Act, 1897, did not apply to the omission of a rule, following the Constitution Bench ruling cited by the Supreme Court.
The memorandum contrasted the GST framework with the Central Excise Act, 1944, and the Customs Act, 1962, where specific saving provisions had been inserted to preserve rights and proceedings despite amendments or omissions in subordinate legislation.
CBIC accepted the Supreme Court’s judgment with the approval of Member (GST).
Considering the binding precedent and CBIC’s clarification, the High Court concluded that the proceedings against the petitioner stood vitiated.
It accordingly disposed of the writ petition and set aside the impugned orders. The Court nevertheless left it open to the respondent authorities to take appropriate measures as warranted in the circumstances.
The order does not record a separate direction granting a quantified refund or deciding the company’s refund entitlement on other grounds.
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