Rule 96(10) Unshackled
The Unravelling of Rule 96(10): Jurisprudence, Practice Lessons, and the Awaited Supreme Court Seal
Preface
Rule 96(10) of the CGST Rules has been more than a line in the statute book for me—it has been a constant companion throughout the last five years of my professional journey. When I first analyzed its implications in an article published in 2020, the provision struck me as an over-correction: a restriction that undermined Parliament’s clear intent in section 16 of the IGST Act to give exporters an unambiguous choice of refund routes. From that moment, I was convinced that rigorous judicial scrutiny would eventually consign the rule to history.
That conviction shaped a significant part of my practice. Between 2020 and 2025 our firm assisted a wide spectrum of exporters—ranging from MSME textile houses to large automotive suppliers—in contesting Rule 96(10) driven demands. We prepared detailed replies at the adjudication stage, marshalled jurisprudence before appellate commissioners, and filed writ petitions where urgent relief was warranted. Each success strengthened the collective argument that the rule was ultra vires and inequitable.
Today, with the Gujarat High Court’s judgment in Addwrap Packaging Pvt. Ltd. striking the rule from all pending proceedings, there is both professional satisfaction and renewed purpose.
While the ultimate word lies with the Supreme Court, I remain confident that the apex court will align with the principles articulated by the High Court and the settled doctrine on repeal without savings. Until then, this compendium offers a close reading of the judgment, the legislative history, and the practical ramifications for exporters and advisors alike.
Let us delve into the details—and stay prepared for the next, and hopefully final, stage of this important debate.
High Court of Gujarat – Addwrap Packaging Pvt. Ltd. & Anr. v. Union of India & Ors. Division Bench: Bhargav D. Karia J. & D. N. Ray J. – CAV judgment pronounced 13 June 2025
1 Statutory Setting
| Provision | Effect for exports |
| Section 16 IGST Act, 2017 | Treats supplies for export as “zero-rated”. Exporters may either: (a) ship goods under LUT/bond without tax and claim refund of unutilised ITC; (b) pay IGST on the export invoice and claim refund of the tax actually paid. |
| Section 54 CGST Act, 2017 | Lays down the generic procedure for refunds. |
| Rule 96 CGST Rules | Governs refund of IGST paid on exports (option (b)); Rule 89 deals with ITC refunds (option (a)). |
| Rule 96(10) (23 Oct 2017, substituted 9 Oct 2018) | Withheld IGST-refund if the exporter or any supplier used specified duty-free or concessional import schemes (AA, EPCG, IGST-free imports under Notn 48/2017-CT etc.). |
2 Timeline & Procedural History
| Date | Event |
| 23 Oct 2017 | Initial insertion of Rule 96(10). |
| 9 Oct 2018 – 1 Oct 2020 | Successive substitutions made the bar more sweeping. |
| 2019–2024 | ~200 exporters (lead petition: SCA 22519/2019) file writs challenging Rule 96(10). |
| 8 Oct 2024 | Centre issues Notification 20/2024-CT omitting Rule 96(10) prospectively; no saving clause included. |
| 19 Sep 2024 & 22 Nov 2024 | Final hearings: Bench invites further arguments on the effect of the omission. |
| 13 Jun 2025 | Judgment delivered; petitions allowed. |
3 Questions Framed
- Does the omission of Rule 96(10) operate retrospectively, prospectively, or prospectively with effect on pending matters?
- If the rule survives for pre-8 Oct 2024 periods, is it intra vires Section 16 & 54 and Articles 14/19(1)(g)?
4 Side-by-side inventory of the principal submissions
| # | Party | Argument Theme | Detailed Submission (verbatim & paraphrase) | Core Authorities / Statutory Anchors | Tactical Objective |
| 1 | Petitioners | Ultra-vires to parent Act | Rule 96(10) “converts a statutory option into a total prohibition.” Sec 16(3) gives an unqualified right to choose IGST-refund route. Sec 54 empowers only procedural conditions; a blanket disqualification is substantive and therefore outside delegated power. | Sec 16(3) IGST Act, 2017; Sec 54 CGST Act, 2017; Sankar Ram v. Kasi Asari (2003 8 SCC 593) (distinction between procedure vs. restriction) | Persuade court that the rule is illegal even if not constitutionally infirm, making doctrinal repeal unnecessary. |
| 2 | Union of India | Statutory power wide enough | “Conditions, safeguards and procedure” in Sec 16 & 54 are broad phrases; Parliament has delegated power to lay eligibility filters to prevent double benefits. | Sec 16, 54 & 164 of the GST Acts; Cosmo Films Ltd. v. Union of India (2023 9 SCC 244) (refund a statutory concession) | Show that the rule fits comfortably within delegated legislation, hence only a policy choice. |
| 3 | Petitioners | Discrimination under Art. 14 | Exporters importing raw materials under AA/EPCG are barred, whereas those importing under other customs exemptions but paying IGST are allowed refund—classification without nexus. | Art. 14 Constitution; Navjivan Cement v. State of Gujarat (2019 SCC OnLine Guj 2370) | Engage heightened scrutiny; seek equal-treatment review beyond mere “rational basis.” |
| 4 | Union | Reasonable classification | Exporters benefiting from duty-free schemes already enjoy cost advantage; permitting IGST refund would create double dip. Distinction is intelligible and nexus is prevention of revenue leakage. | E. P. Royappa (1974 4 SCC 3); Art. 302 Constitution (power to impose fiscal restraints in inter-State trade) | Justify bar on equality grounds; frame it as legitimate anti-abuse measure. |
| 5 | Petitioners | Doctrine of repeal without savings | Deletion of Rule 96(10) via Not. 20/2024 without a saving clause triggers Kolhapur principle: the rule “vanishes” for pending matters; department’s right to rely on it doesn’t survive. | Kolhapur Canesugar v. Union of India (2000 2 SCC 536); Sec 6 General Clauses Act, 1897 | Offer a shortcut victory: court can allow petitions without reaching constitutional merits. |
| 6 | Union | Savings by implication | Even where repeal is silent, Sec 6 General Clauses Act preserves accrued rights & liabilities; here the revenue’s right to deny an already claimed refund is such a liability. | Sec 6 General Clauses Act, 1897; Gurcharan Singh Baldev v. Yashwant Singh (1977 1 SCC 310) | Keep existing SCNs/O-i-Os alive; confine omission to future exports only. |
| 7 | Petitioners | Proportionality & Puttaswamy test | (i) Legitimate aim conceded (avoid double benefit); (ii) Suitability missing— less intrusive methods exist (credit freeze, post export audit); (iii) Necessity fails— complete bar not least restrictive; (iv) Balancing disproportionate: exporters lose liquidity & competitiveness. | K. S. Puttaswamy (Privacy) v. Union of India (2017 10 SCC 1) (four-step test); Art.19(1)(g) | Invoke substantive due process to buttress Art. 14 claim, anticipating SC appeal. |
| 8 | Union | Refund ≠ vested right | Refund claims are in-choate until sanctioned; Rule 96(10) merely sets eligibility. No fundamental right to a concession; proportionality test doesn’t bite. | UOI v. VKC Footsteps India (2021 13 SCC 259) (refund as statutory); Maneka Gandhi (procedure can regulate a right) | Undermine due process / proportionality attack; classify refund as pure policy. |
| 9 | Petitioners | Administrative chaos & cascading | Dual bar: IGST refund denied, and ITC refund restricted under Rule 89(4B) ⇒ credits become stranded, violating GST design of tax-on value-add. | GST Council Minutes (31 Aug 2018); OECD VAT Guidelines (credit neutrality) | Illustrate economic distortion to sway court on equity grounds. |
| 10 | Union | Transition to new Sec 16(4) | Parliament’s 2023 amendment adding Sec 16(4) explicitly empowers Govt. to specify person based conditions; Rule 96(10) was a precursor; deletion merely aligns chronology, not a concession of invalidity. | Finance Act, 2023; Statement of Objects & Reasons | Signal that Govt. may re-introduce similar bar; preserve right to legislate further. |
5 Court’s Analysis
| # | Core Issue Before the Court | Bench’s Analytical Steps & Findings | Key Authorities / Provisions Relied On | Practical Result |
| 1 | Whether Notification 20/2024-CT (8 Oct 2024) operates retrospectively or prospectively | a) An “omission” of a rule is legally a repeal. b) Under the general rule of prospectivity, a repealed provision ceases to have future operation unless Parliament/Govt. expressly makes it retrospective. c) Notification 20/2024 contains no retrospective language; therefore, it is prospective in form. | · Crawford, Statutory Construction (doctrine of repeal) · Section 164 CGST Act (rule-making power) · Art. 245 Const. (competence to legislate retrospectively) | Rule 96(10) cannot be invoked for exports made on or after 8 Oct 2024. |
| 2 | Effect of a prospective omission on matters that were pending on 8 Oct 2024 | a) Applied the Kolhapur doctrine: repeal without a saving clause abates all proceedings in which the repealed provision supplied the sole cause of action. b) Section 6, General Clauses Act, is inapplicable because it saves only “rights, liabilities or penalties incurred”; here, the department’s mere power to deny a refund is not a “liability incurred” until crystallized by a final order. c) Therefore, all adjudication, appellate or writ proceedings still alive on 8 Oct 2024 are governed by the law as it now stands—i.e. without Rule 96(10). | · Kolhapur Canesugar & Refineries v. Union of India (2000) 2 SCC 536 · General Officer Commanding-in-Chief v. Subhash Chandra Yadav (1988 SC) · Section 6, General Clauses Act, 1897 | SCNs, O-i-Os and appeals pending on the cut-off date lose their foundation; refund claims revive. |
| 3 | Interaction between Rule 96(10) and Section 16 & 54 of the parent Acts | a) Noted that Section 16(3) & 54 speak of “conditions and safeguards”, but the impugned rule did not merely impose procedure—it completely eliminated the statutory option to pay IGST and claim refund. b) Such a restriction verges on supplanting, not supplementing, the Act; however, the Court refrained from ruling on vires, holding the question academic once the rule stood inoperative for pending matters. | · Section 16 IGST Act, 2017 · Section 54 CGST Act, 2017 · E.P. Royappa & Maneka Gandhi (scope of “procedure” v. “restriction”) | Constitutional validity left open; case disposed on narrower ground of statutory abatement. |
| 4 | Whether the revenue could still refuse IGST refund by invoking Rule 96(10) indirectly (e.g., treating it as guidance) | Court held that once a provision is omitted without a saving clause, it is wholly extinct; officers cannot resuscitate it through circulars or “consistent practice”. Any reliance would be ex facie illegal and amenable to writ remedy | · M.Nagraj v. Union of India (2006) 8 SCC 212 (principle that a dead provision cannot be revived administratively) | Field formations must process refunds solely under extant Rule 96 & Section 54/16; no “shadow” application of the deleted rule is permissible. |
| 5 | Need for a timebound direction to grant refunds | Petitioners sought an eight-week mandate; Bench declined, citing: a) Refund processing involves factual verification; rigid timelines could prejudice both sides. b) Existing CBIC instructions already prescribe 60-day norm under Section 54(7). | · Section 54(7) CGST Act (60-day sanction window | No fixed deadline imposed; refunds to be processed “in accordance with law”—but absence of Rule 96(10) must be respected. |
| 6 | Costs & broader guidance | Exercising equity jurisdiction, Court ordered no costs yet emphasized that its ratio should guide “all authorities within the State” and be considered persuasive elsewhere. | – Art. 226 & 227 Const. | Sets persuasive precedent pan-India; until the Supreme Court rules, other HCs may adopt or distinguish on facts. |
6 Final Orders (paras 204-210)
- Notification 20/2024-CT is prospective, but its consequence is that Rule 96(10) cannot be invoked in any proceeding that was alive on 8 Oct 2024.
- All notices, demands, and appellate orders that rested solely on Rule 96(10) are quashed and set aside.
- Refund applications must now be processed under Section 54 & 16 and Rule 96 without the impugned restriction.
- No order as to costs; connected civil applications disposed.
7 Probable Trajectories Before the Supreme Court and Their Practical Fallout
| Scenario in the Supreme Court | Likely Doctrinal Path Taken by the Bench | Immediate Legal Outcome (ratio & operative direction) | Practical Effect on Exporters & Pending Litigation |
| A. Complete Affirmation (SLP dismissed / appeal dismissed) | Bench endorses Kolhapur doctrine exactly as Gujarat HC.• May add that Rule 96(10) always exceeded delegate power, but confines relief to pending matters to avoid revenue upheaval. | – Rule 96(10) declared inapplicable to all proceedings alive on 8 Oct 2024.– HC judgment attains pan-India finality under Art. 141. | ✔ All writs/appeals across India citing the rule succeed automatically. ✔ Department must process IGST refunds forthwith; no scope to rely on “shadow” Rule 96(10). |
| B. Partial Affirmation / Prospective- Only | SC agrees omission is prospective and holds Sec 6 General Clauses preserves “liabilities incurred”.• Labels refund liability as “accrued” once exports occurred. | – Rule 96(10) remains enforceable for exports up to 7 Oct 2024, regardless of case pendency.– HC quashing of pending SCNs set aside; matters remanded for decision on merits. | ✖ Exporters with IGST-refund claims predating 8 Oct 2024 again face litigation; fresh adjudication required. ✔ Exports on/after 8 Oct 2024 remain unaffected. |
| C. Complete Reversal (SC upholds Rule 96(10) fully) | – Bench rules that: (i) refund is a concession; (ii) bar is a legitimate anti-abuse measure; (iii) omission is purely policy-driven prospectively; Sec 6 GCA saves all past & pending liabilities. | – Rule 96(10) declared valid and applicable to all exports prior to 8 Oct 2024.– Pending cases must be decided in line with the rule; HC order set aside. | ✖ Large outflow risk: exporters must either forgo IGST-refunds or repay with interest. ✖ Demand confirmations likely; possible penalty exposure if suppression alleged. ✔ Post-8 Oct 2024 exports unaffected. |
| D. Constitutional Strike-Down (SC declares Rule 96(10) ultra vires ab initio) | Court finds blanket prohibition disproportionate (Art. 14/19(1)(g)); emphasizes neutrality principle of GST. • Kolhapur discussion becomes moot—rule never valid. | – Rule 96(10) void from inception (23 Oct 2017).– All past denials, recoveries, and pending matters collapse; refund right crystallizes. | ✔ Mass refund entitlement including closed disputes, subject only to general limitation under Sec 54. ✔ Interest payable under Sec 56; avalanche of refund reprocessing. |
7 Jurisprudential Significance
| Point | Practical Consequence |
| Doctrine of abatement on repeal | Confirms that a fiscal rule, once omitted without savings, cannot sustain even ongoing assessments or appeals. |
| Legislative drafting | Ministries must insert clear transition clauses when withdrawing GST conditions, or risk wholesale collapse of enforcement. |
| Refund strategy | Exporters with disputes alive on 8 Oct 2024 can cite the ruling to secure IGST refunds even if they or their suppliers used AA/EPCG/48-series benefits. |
8 Checklist for Practitioners
- Identify affected cases – Track all IGST-on-exports matters (refunds denied or SCNs issued) that were open on 8 Oct 2024.
- Seek rectification/withdrawal – Move the jurisdictional officer or appellate forum to drop proceedings citing the High Court ratio.
- Segregate ITC-refunds – The judgment does not disturb Rule 89(4A)/(4B); ensure officers do not suppress ITC refunds on that ground.
- Watch for new rules – Any re-introduction of a similar bar under amended Section 16(4) must still pass proportionality and equality tests.
This article is a scholarly critique for professional use. Readers should obtain specific legal advice before acting on any view expressed herein.
About the Author & Office Locations
CA Navjot Singh is a seasoned indirect-tax specialist with deep expertise in Customs, Foreign Trade Policy and GST. He delivers strategic advisory and hands-on execution to conglomerates, Fortune 500 companies and high-growth enterprises.
- Key architect of long-term retainership models that pre-empt audit objections and mitigate litigation risk.
- Designs India-wide GST frameworks that optimise tax and cash-flow while dovetailing cross-border VAT regimes (EU VAT, GCC VAT).
- Advises clients through assessment proceedings, prepares robust submissions and representations, and drafts precise replies to show-cause notices, audit objections and spot memos.
- Represents taxpayers before adjudicating authorities, the Tribunal, the Sales-Tax Revisionary Board and the West Bengal Taxation Tribunal.
- Conducts comprehensive GST-impact assessments, incentive-scheme evaluations and cash-flow modelling; recommends mitigation strategies as benefits phase out.
- Prepares advance-ruling applications and engages with GST-Council committees to shape interpretative guidance.
- Develops end-to-end dispute-resolution roadmaps, from pre-litigation negotiation to appellate and judicial forums.
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