Rule 96(10) of the Central Goods and Services Tax (CGST) Rules, 2017 operated with effect from October 23, 2017. In essence, it restricted refunds of Integrated Goods and Services Tax (IGST) paid on exports where specified exemptions or concessions had been availed on imports or domestic procurements. The provision underwent several amendments and generated extensive litigation and demands for surrender of export refunds with interest. Many exporters repaid the amounts under departmental pressure. The government eventually omitted the rule through notification 20/2024 Central Tax dated October 8, 2024. However, this notification contained no saving clause preserving proceedings relating to the period when the rule was in force.
In Goodluck India Ltd. v. Union of India (2026 [112] GSTL 3 [SC]), the Supreme Court considered whether pending proceedings could survive that omission. Relying on the Constitution Bench judgment in Kolhapur Canesugar Works (2000 [119] ELT 257 [SC]), it held that continuation of pending proceedings required an appropriate legal provision preserving them. There was none. The Court said that the GST council’s recommendation for prospective omission of Rule 96(10) could not substitute for a saving clause in the notification. It also noted the council’s assessment that the rule was causing unnecessary complications without serving the intended benefit. The Court saw the omission without a saving clause as intended to end those complications. The judgment, however, must be read accurately. The Supreme Court settled the treatment of pending proceedings but did not declare Rule 96(10) unconstitutional or expressly order reopening of every concluded case.
Now, the CBIC circular says that the omission of Rule 96(10) is effective retrospectively from October 23, 2017, the date from which the rule operated. It advises field formations to deal with pending proceedings concerning Rule 96(10) in accordance with the judgment. It says that similar treatment applies, mutatis mutandis, to the omission of Rules 89(4A) and 89(4B) as well.
Exporters who did not litigate but surrendered refunds along with interest are wondering whether they can ask the government to return the money. If, on the Board’s own interpretation, the omission operates from the rule’s inception, why should the government retain amounts recovered solely under that rule? That is their question.
Statutory refund deadlines and the finality of earlier orders may present legal obstacles to refund claims. The circular alone should not be assumed to remove them. The government should, suo motu, initiate repayment of amounts recovered towards reversal of GST refunds, together with interest collected, wherever the omitted Rule 96(10),
Rule 89(4A) or Rule 89(4B) was the sole basis of recovery. Exporters should not have to apply afresh and litigate again. The department already has records of these recoveries and should identify the affected exporters, verify the amounts collected and arrange repayment without waiting for each exporter to initiate proceedings. Any legal obstacles should be addressed through an appropriate legal mechanism and a simple verification procedure.
Returning these collections would release exporters’ working capital and give practical effect to the Board’s declared position. Closing pending demands while retaining earlier collections would leave the relief incomplete.
