Delhi High Court Quashes All GST Proceedings Based on Deleted Rule 96(10) Against Exporters

The Delhi High Court, while granting major relief to exporters, has ruled that no proceedings can continue under Rule 96(10) of the CGST Rules, since the provision has been formally omitted from the statute without any saving clause. The omitted Rule 96(10) of the Central Goods and Services Tax (CGST) Rules restricted exporters from claiming a refund of Integrated Tax (IGST) paid on exports if they had already availed certain input tax benefits or exemptions. The bench of Justice Prathiba M. Singh and Justice Saurabh Banerjee observed that any summons, show-cause notices, or orders issued under the deleted rule are legally unsustainable and liable to be quashed. When the Goods and Services Tax (GST) regime was introduced in 2017, the central promise was to create a seamless, credit-based tax structure facilitating “ease of doing business,” particularly for exporters. Under Section 16 of the IGST Act, exporters were assured full refund of Integrated GST (IGST) paid on exported goods or services, thereby maintaining zero-rated export conditions. To operationalise this refund mechanism, Rule 96 of the CGST Rules laid down the procedure for granting IGST refunds, treating the shipping bill itself as the refund application. This system was designed to automate and simplify the refund process. In October 2017 and January 2018, the Government issued a series of notifications — notably Notification No. 78/2017-Cus., 79/2017-Cus., 40/2017-CT(Rate) and later Notification No. 3/2018 — introducing Rule 96(10). The rule imposed restrictions on exporters seeking IGST refunds if they had availed Customs duty exemptions (such as those under Advance Authorization, EPCG, or EOU schemes), or Concessional GST rate notifications on domestic procurement. In effect, the provision created a scenario where exporters could either enjoy duty exemptions on inputs Or claim IGST refund on exports but not both. This restriction was never contemplated under Section 16 of the IGST Act, which guarantees IGST refund without linking it to import duty exemptions. As a result, exporters began arguing that the rule created additional conditions not authorised by the parent law. Rule 96(10) led to years of confusion, compliance burden, and frequent disputes due to: 1. Ambiguity and Overlap with Other GST Rules Exporters struggled to interpret how the rule interacted with: Rule 89(4A) and 89(4B), dealing with ITC refunds Advance Authorization benefits Domestic procurement at concessional ratesThe interpretation differed from officer to officer, resulting in inconsistent enforcement. 2. Automatic IGST Refunds Blocked Customs systems began automatically withholding refunds if the system detected use of any exemption on inputs—even if the exporter had correctly paid IGST at the time of export. 3. Retrospective Demands by GST Authorities Summons and show-cause notices were issued years after refunds were granted, alleging wrongful availment of IGST refunds under Rule 96(10). This created huge financial uncertainty, especially for MSME exporters. 4. Clash Between Policy Intent and Ground Reality While the Government encouraged exports through duty remission schemes, Rule 96(10) penalised exporters for using those very schemes. The matter reached the GST Council after sustained representations from trade bodies, EPCs, and exporters nationwide. In its 54th meeting, the Council formally acknowledged that Rule 96(10) was creating “unnecessary complications”. It was not serving any intended purpose. It needed to be deleted prospectively This recommendation was important because it signified a policy-level acceptance that the rule was flawed. Following the Council’s recommendation, the Central Government issued Notification No. 20/2024 on 8 October 2024, omitting Rule 96(10) entirely from the CGST Rules. However, the notification did not contain any saving clause, meaning there was no explicit protection for ongoing investigations, SCNs, or adjudication proceedings. This legislative silence triggered a wave of litigation across the country, as exporters argued that once the rule is omitted without a saving clause, all pending proceedings must automatically lapse. Between late 2024 and 2025, multiple High Courts—including Kerala, Calcutta, Uttarakhand, Gujarat, and Bombay—delivered consistent judgments holding that an omitted rule stands obliterated, as if it never existed. Section 6 of the General Clauses Act (which protects ongoing actions after repeal) does not apply to rules, only to statutes. Therefore, all pending actions under Rule 96(10) must stop immediately unless the case is already a “past and closed transaction”. The court while allowing the petition held that Rule 96(10) cannot be invoked for any pending proceedings, including SCNs, adjudications, or appeals. No demand or recovery action can continue based on an omitted rule. Exporters are entitled to claim IGST refunds in accordance with law, without the restrictions earlier imposed by Rule 96(10). Case Details Case Title: Vinayak International Housewares P Ltd Versus UOI Case No.: W.P.(C) 3154/2023 Date: 27/11/2025 Counsel For Petitioner: Rajat Mittal Counsel For Respondent: Aditya Singla, SSC Click Here To Read Order Read More: India’s Gross GST Collections Rise Marginally to Rs. 1.70 Lakh Crore in November 2025; Domestic Revenues Dip 2.3%

Delhi High Court Quashes All GST Proceedings Based on Deleted Rule 96(10) Against Exporters

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