GST Update

Desk of CA. Praveen Sharma – 881 Series (CAPS) 

Delhi High Court in the case of Vinayak International Housewares

• Multiple exporters approached the Delhi High Court challenging Rule 96(10) of the CGST Rules, which restricted IGST refunds on exports when certain customs/GST exemptions were availed.

• The petitioners were facing summons, enquiries and show-cause notices solely based on this sub-rule and therefore sought its invalidation.

• The 54th GST Council, acknowledging industry hardship, recommended deletion of Rule 96(10), calling it needless, impractical and without real revenue benefit.

• Based on this recommendation, the Government issued Notification 20/2024, omitting Rule 96(10) w.e.f. 08.10.2024, without any saving clause to protect past or ongoing proceedings.

• High Courts across Kerala, Calcutta, Uttarakhand, Gujarat and Bombay have held that when a rule is omitted without a saving clause, all pending actions under that rule lapse, relying on Kolhapur Canesugar Works (SC).

• These courts also observed that the deleted rule was inconsistent with Section 16 of the IGST Act, which guarantees refund on zero-rated supplies without such conditions.

• Applying these principles, the Delhi High Court held that all summons, SCNs, enquiries and orders issued under Rule 96(10) — except matters already past and closed — cannot legally continue after its omission.

• Consequently, the Court quashed all ongoing proceedings under Rule 96(10) in the writ petitions and allowed the exporters to pursue IGST refunds without restriction.

Regards : CA. Praveen Sharma on Linkedin