CBIC Confirms Rule 96(10) Omission is
Effective from 2017, thus Double Benefit Claimed Earlier must be Reversed in
the Absence of Savings Qualification in Law
The Central
Board of Indirect Taxes & Customs (CBIC) has issued Circular No.
264/10/2026-GST dated October 26, 2026. This circular provides massive
retrospective relief to Indian exporters by clarifying that the deletion of
Rule 96(10) of the CGST Rules, 2017, applies retrospectively from October
23, 2017.
Key
Highlights & Legal Stand
·
The Original Restriction: Rule
96(10) was originally brought in to prevent a "double benefit". It
restricted exporters who had imported inputs without paying IGST (using
concessional or exemption schemes) from exporting final goods on payment of
IGST and claiming a subsequent tax refund.
·
The Council Shift: Due to
widespread operational hardships faced by exporters, the GST Council
recommended deleting this restriction. Consequently, the government
prospectively omitted Rule 96(10) on October 8, 2024, via Notification No.
20/2024-Central Tax.
·
The Supreme Court Intervention: In a
landmark ruling on August 6, 2026 (M/s
Goodluck India Limited & Anr. v. Union of India
& Ors.), the Hon'ble Supreme Court held that since the 2024 omission
did not include a specific saving or sunset clause, it completely wiped out the
rule for all pending proceedings. The apex court noted that Section 6 of the
General Clauses Act, 1897, cannot save pending actions when an administrative
rule is completely omitted without explicit statutory continuation.
·
Retrospective Resolution: Aligned
with the Supreme Court order, the CBIC has officially instructed field tax
formations that the omission of Rule 96(10) is fully effective
retrospectively from October 23, 2017. Any pending show-cause notices,
demands, or recovery proceedings initiated against exporters on account of Rule
96(10) violations are to be settled accordingly.
·
Extension to Rules 89(4A) & 89(4B): The
circular establishes that this retrospective clean slate applies mutatis mutandis (identically) to the
omission of Rules 89(4A) and 89(4B) as well, expanding the relief umbrella
across older export refund disputes.
Attention is invited
to the decisions of various
Courts on the issue of retrospective applicability of omission
of rule 96(10) of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as “the CGST Rules”).
Doubts are being raised by the tax officers as well as taxpayers on the issue as to whether in view of these judgements the omission
of sub- rule (10) of rule 96 of the CGST Rules, made w.e.f.
08.10.2024 vide notification No. 20/2024-
Central Tax,
dated 8.10.2024, is applicable retrospectively from
23.10.2017 (date from which it was brought into effect),
as ruled by the Courts.
2.
The matter has been examined. In order to ensure uniformity in the implementation of the law across the field formations, the Board, in exercise of its powers conferred under sub- section (1) of section 168 of the Central
Goods and Services Tax Act, 2017 (hereinafter referred to as “the
CGST Act”) clarifies the issues as under.
3.
Rule 96(10) was introduced in the CGST Rules w.e.f.
23.10.2017, with the intention to prevent the double benefit to exporters, so that exporters
who benefited from IGST exemption on procurement under specified notifications could not also claim IGST refunds
on export of those goods. In the 54th meeting of the GST Council, held on 09.09.2024, in view of difficulty being faced by the exporters
in respect of refund on exports due to restriction, imposed vide rule
96(10), in cases where benefit of the specified
concessional / exemption notifications is availed on the inputs, rule 96(10) of the CGST Rules was omitted
prospectively w.e.f. 08.10.2024 vide the CGST (Second Amendment) Rules, 2024 (notified vide notification No. 20/2024-GST dated 08.10.2024).
4.
Kind attention is drawn to the judgment dated 06.08.2026 passed by the Hon'ble Supreme Court in Special Leave Petition (Civil)
No. 24550 of 2025, in the matter of M/s Goodluck
India Limited & Anr. v. Union
of India & Ors.,
along with other connected
matters. The Hon'ble Supreme Court vide the said order, has held that in the absence of any saving clause or sunset
clause accompanying the omission
of rule 96(10) of the CGST Rules, the said omission
applies to all proceedings pending as on the date of omission.
5.
In the matter of M/s Goodluck India Limited,
Hon'ble Supreme Court has relied upon the Constitution Bench judgment in Kolhapur
Canesugar Works Ltd. v. Union of India [(2000)
2 SCC 536], wherein
it was held that section 6 of the General Clauses Act, 1897 does not apply to the omission
of a rule. The Hon'ble Court reiterated that, where a rule is omitted,
pending proceedings can continue only where there is an express
provision for their continuance, or a legal device has been incorporated in the statute/rules to preserve
such proceedings.
6.
In view of this decision of the Hon'ble
Supreme Court,
it is hereby clarified that the said omission
of rule 96(10) of the CGST Rules will
be effective
retrospectively from 23.10.2017. Accordingly, the field formations are advised to deal with pending proceedings concerning rule 96(10) in accordance with the said judgment. It may also be noted that such a treatment
shall apply, mutatis
mutandis, in respect of omission
of rules 89(4A)
and 89(4B) as well.
7.
It is requested that suitable
trade notices may be issued
to publicize the contents of this Circular.
8.
Difficulty, if any, in the implementation of this Circular may be brought
to the notice of the Board.