CBIC has clarified that the omission of GST Rule 96(10) applies retrospectively from October 23, 2017, following a Supreme Court ruling. The clarification affects pending proceedings involving restrictions on IGST export refunds and extends similar treatment to the omitted Rules 89(4A) and 89(4B).
The Central Board of Indirect Taxes and Customs (CBIC) has issued an important clarification concerning the retrospective effect of the omission of Rule 96(10) of the CGST Rules, 2017.
Through Circular No. 264/10/2026-GST dated October 26, 2026, CBIC has clarified that the omission of the rule is effective retrospectively from October 23, 2017, following a judgment delivered by the Supreme Court on August 6, 2026.
The clarification is significant for exporters facing pending GST proceedings involving earlier restrictions on refunds of Integrated Goods and Services Tax (IGST).
What Was GST Rule 96(10)?
Rule 96(10) was introduced with effect from October 23, 2017, to prevent exporters from obtaining specified double benefits under the GST framework.
The provision restricted refunds of IGST paid on exports where exporters had availed certain concessional or exemption benefits on procurement under specified notifications.
Over time, the restriction created difficulties for exporters claiming refunds after procuring inputs under the relevant concessional arrangements.
Following the recommendations of the 54th GST Council meeting held on September 9, 2024, the government omitted Rule 96(10) through Notification No. 20/2024–Central Tax dated October 8, 2024.
However, the omission was initially notified prospectively, creating disputes concerning its application to earlier transactions and pending proceedings.
Supreme Court Ruling on Retrospective Application
CBIC has referred to the Supreme Court judgment dated August 6, 2026, in the matter of Goodluck India Limited & Another v. Union of India & Others.
The Supreme Court examined whether proceedings initiated under Rule 96(10) could continue following its omission.
The Court held that, in the absence of an express saving or sunset clause preserving the earlier rule, its omission applies to proceedings that were pending on the date of omission.
The judgment also referred to the Constitution Bench decision in Kolhapur Canesugar Works Ltd. v. Union of India, dealing with the legal consequences of omitting subordinate legislation.
CBIC Directs GST Officers to Follow Supreme Court Judgment
Following the ruling, CBIC has clarified that the omission of Rule 96(10) is to be treated as effective retrospectively from October 23, 2017.
Tax authorities have been directed to deal with pending proceedings concerning the omitted rule in accordance with the Supreme Court judgment.
The Board has further clarified that similar treatment will apply, with necessary modifications, to the omission of Rules 89(4A) and 89(4B) of the CGST Rules.
Implications for Exporters
The clarification provides an important legal basis for exporters contesting pending proceedings arising from the omitted refund restrictions.
However, taxpayers must examine whether their matters fall within the scope of the Supreme Court ruling and the circular. The clarification does not automatically establish eligibility for every refund claim or reopen every concluded proceeding.
Exporters and GST professionals should review pending refund disputes and relevant adjudication or appeal proceedings in light of the clarification.
Source: CA Sansaar