In a significant relief for exporters, the Central Board of Indirect Taxes and Customs (CBIC) has accepted the Supreme Court's ruling that the omission of Rule 96(10) of the CGST Rules, 2017 will apply to proceedings that were pending when the provision was omitted. The development could bring closure to a large number of disputes involving refund of IGST paid on exports.
Rule 96(10) had restricted certain exporters from claiming refund of IGST paid on exports where they or their suppliers had availed specified concessional/exemption benefits, including benefits connected with schemes such as Advance Authorisation and EPCG. The provision had generated considerable litigation over the years.
The Central Government ultimately omitted Rule 96(10) with effect from 8 October 2024. Importantly, the omission was made without a saving clause preserving the restriction for pending proceedings.
Supreme Court's Important Ruling
In M/s Goodluck India Limited & Anr. v. Union of India & Ors., the Supreme Court on 6 August 2026 held that exporters whose refund applications or proceedings were pending when Rule 96(10) was omitted could claim IGST refunds without being subjected to the restriction contained in the omitted rule.
The Supreme Court observed that the rule had been removed because it was creating unnecessary complications without serving its intended purpose. Since the Government did not introduce any saving or sunset clause while deleting it, the restriction could not continue to govern pending proceedings.
The Court also noted that several proceedings on the issue were pending before different High Courts and expressed the expectation that its ruling would bring the controversy to an end.
CBIC Accepts Supreme Court Position
The latest development is particularly important because CBIC has now accepted the Supreme Court judgment, according to the current report on the departmental position. Consequently, the benefit flowing from the omission of Rule 96(10) is to extend to relevant proceedings that were pending as on the date of omission.
This can have substantial financial implications for exporters whose IGST refunds were rejected, withheld or disputed solely because of Rule 96(10) and whose proceedings remained pending when the provision was omitted.
What Exporters & CAs Should Check
Exporters and their advisers should now review pending refund applications, show-cause notices, adjudication proceedings, appeals and writ petitions involving Rule 96(10). Particular attention should be given to whether the proceeding was pending on 8 October 2024, because the Supreme Court ruling specifically addresses proceedings pending when the rule was omitted.
The decision should not, however, be described as automatically reopening every Rule 96(10) matter that had already attained finality before the omission. The procedural status and facts of each case remain important.
Key Takeaway
Exporters should no longer be denied IGST refund in proceedings that were pending when Rule 96(10) was omitted merely by relying on the erstwhile restriction under that rule. With CBIC accepting the Supreme Court's position, pending Rule 96(10) disputes may now move toward resolution in favour of eligible exporters. CA Sansaar