Exporters Win: Gujarat HC Allows IGST Refunds on Pending Cases Post Omission of Rule 96(10) [READ ORDER]

The Gujarat High Court while ruling in favour of the exporters has allowed the Integrated Goods and Service Tax (IGST) refunds on pending cases post omission of Rule 96(10) of the Central/State Goods and Services Tax Rules, 2017.

The bench of Justice Bhargav D. Karia and Justice D.N.Ray has observed that by Notification No.20/2024 Rules, 2024 have been notified and as per Rule 10 of the Rules, Rule 96(10) of the CGST Rules has been omitted with prospective effect. This would give rise to three situations, firstly, whether the same would be applicable retrospectively, or secondly, prospectively or thirdly, same would be applicable prospectively but also to “pending proceedings”. Rule 10 of Rules, 2024 is applicable prospectively and the same also would be applicable to pending proceedings.

The group of petitions are preferred challenging the vires of Rule 96(10) of the Central/State Goods and Services Tax Rules, 2017  as substituted by the Central Goods and Services Tax (12th Amendment) Rules, 2018 with effect from 9.10.2018. Prior to its substitution, Sub-rule(10) was substituted by Central Goods and Services Tax 11th Amendment Rules, 2018 with retrospective effect from 23.10.2017 and Central Goods and Services Tax 8th Amendment Rules, 2018 with retrospective effect from 23.10.2017.

The petitioner is engaged in the business of manufacture, supply/export of conductors and Optical Fiber Ground Wires (OPGW) for several years and exports substantial quantities of finished goods manufactured to its customers spread across the world.

The petitioner was entitled to claim rebate i.e. refund of the actual amount of excise duty paid on the goods exported under Rule 18 of the Central Excise Rules, 2002.

With effect from 01.07.2017 instead of levying and collecting additional duty of customs equal to the duty of excise chargeable on similar goods produced or manufactured in India, Integrated Goods and Services Tax (IGST) came to be levied on imported goods, whereas the goods cleared for export were deemed to be transactions in the nature of inter-state supply of goods under the IGST Act and therefore, IGST was levied and collected on the goods exported to the foreign countries.

The rebate i.e. refund of excise duties paid on the exported goods was allowed under Rule 18 of the Cenvat Excise Rules, 2002 prior to 01.07.2017. The IGST Act has also incorporated similar provisions for refund of tax in section 16 of the IGST Act,2017. The goods or services which are exported by the petitioner were not subjected to IGST and they are treated as “zero-rated supply” under section 16 of the IGST Act, 2017.

Section 16 of the IGST Act,2017 provides that a registered person making zero rated supply shall be eligible to claim refund under either of the conditions prescribed in sub-section(3) thereof i.e. (a) supply of goods or services under bond or Letter of Undertaking (LUT) without payment of integrated tax and claim refund of unutilised Integrated Tax Credit or (b) supply of goods or services on payment of Integrated Tax and claim refund of such tax paid. To claim the refund/rebate under section 16 of the IGST Act, provisions of section 54 of the GST Act were made applicable and the procedure prescribed in CGST Rules which are applicable for refund claim under section 54 of the GST Act are therefore, prescribed for availing refund/rebate under section 16 of the IGST Act.

The petitioners have made rebate/refund claims of IGST paid on goods and services exported out of India. Therefore, Rule 96 of the CGST Rules for entitlement of refund of the petitioners under section 54(3) read with section 16 of the IGST Act shall be applicable. 

The petitioners contended that in view of substitution of Sub-rule(10) of Rule 96 of the CGST Rules, the right of the petitioners to claim refund of IGST paid on the entire goods exported by the petitioners was curtailed if the supplier of any of the inputs to the petitioners claiming refund has availed benefit of IGST exemption under Notification No.78/2017-Customs dated 13.10.2017 (EOU Scheme) or Notification No.79/2017-Customs dated 13.10.2017 (Advance Authorisation and EPCG scheme) as well as Notification No. 48/2017- Central Tax dated 18.10.2017 for claiming benefit of deemed export or merchant export Notification no. 40/2017 dated Central Tax (Rate) dated 23.10.2017 and Notification No. 41/2017 Integrated tax (Rate) dated 23.10.2017.

Notification No. 54/2018 has been made applicable prospectively providing that from 9.10.2018 onward, bar on claiming refund of IGST would apply in all cases where the registered person himself avails IGST exemption benefit under the scheme of Advance Authorisation, EPCG scheme and the same would not apply when supplier to the registered person avails the said benefit.

The court held held that the omission of Rule 96(10) would apply to all the proceedings/cases/petitions which are pending for adjudication either before this Court or before the respondent adjudicating authority and no further proceedings are required to be carried forward and petitioners would be entitled to maintain refund claims of IGST paid on export of goods.

Case Details

Case Title: Messrs Addwrap Packaging Pvt. Ltd. & Anr. Versus Union Of India & Ors. 

Case No.: R/SPECIAL CIVIL APPLICATION NO. 22514 of 2019

Date:   13/06/2025

Counsel For Petitioner: Senior Advocate Mr. V.Sridharan 

Counsel For Respondent: ASG Mr. Devang Vyas

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