Rule 96(10) Omitted – Pending GST Demands cannot survive in the absence of specific saving clause- Held Calcutta High Court.
Rule 96(10) Omitted – Pending GST Demands cannot survive in the absence of specific saving clause- Held Calcutta High Court.
Introduction
The Calcutta High Court in the case of Techno Waxchem Private Limited v. Union of India & Ors. (WPA 13772 of 2025 dated 22nd May 2026) has delivered a highly significant judgment on the legal effect of omission of Rule 96(10) of the CGST Rules, 2017 and its impact on pending proceedings initiated against exporters.
The judgment assumes immense importance because it directly addresses one of the most heavily litigated issues under GST relating to:
refund of IGST paid on exports,
Advance Authorisation Scheme,
alleged double benefit,
and continuation of proceedings after deletion of Rule 96(10).
The Court has categorically held that once Rule 96(10) stood omitted from the statute book by Notification No. 20/2024-Central Tax dated 08.10.2024, proceedings initiated solely on the basis of alleged contravention of such Rule could not survive in absence of a saving clause.
The judgment extensively discusses:
omission versus repeal,
applicability of Section 6 of the General Clauses Act,
effect of deletion of delegated legislation,
and the doctrine that omission of a rule obliterates it from the statute book unless specifically saved.
The ruling is likely to become one of the leading precedents in pending Rule 96(10) disputes throughout the country.
Background of Rule 96(10)
Under the GST framework, exports are treated as “zero-rated supplies” under Section 16 of the IGST Act. Exporters were permitted to claim refund through two alternative routes:
export under LUT/Bond without payment of IGST and claim refund of accumulated ITC, or
export on payment of IGST and thereafter claim refund of such IGST paid.
Rule 96 of the CGST Rules dealt with refund of IGST paid on export of goods and services.
Sub-rule (10) of Rule 96 was introduced to prevent what the department described as “double benefit”, namely:
procurement/import of goods without payment of tax under specified exemption notifications,
followed by payment of IGST through accumulated ITC and subsequent claim of IGST refund on exports.
Over time, Rule 96(10) underwent multiple amendments through various notifications including:
Notification No. 75/2017,
Notification No. 39/2018,
Notification No. 53/2018,
Notification No. 54/2018,
and Notification No. 16/2020.
However, in the 54th GST Council Meeting, the Council itself recommended omission of Rule 96(10) along with connected provisions on the ground that the rule had led to unnecessary complications.
Pursuant thereto, Notification No. 20/2024-Central Tax dated 08.10.2024 omitted Rule 96(10) from the statute book.
This omission ultimately became the central issue before the Calcutta High Court.
Facts of the Case
The petitioner company was engaged in manufacturing and export of chemical products used in the rubber industry. One of the major imported inputs used by the petitioner was “Resorcinol”, which was imported under the Advance Authorisation Scheme without payment of IGST.
During the period October 2017 to March 2022, the petitioner exported finished goods on payment of IGST and claimed refund aggregating to approximately ₹6.28 crores.
The department alleged that:
the petitioner had imported inputs without payment of IGST under Advance Authorisation,
and simultaneously claimed refund of IGST paid on exports,thereby violating Rule 96(10).
Proceedings were initiated under Section 74 and eventually demand orders were passed on 04.02.2025, even after omission of Rule 96(10).
The petitioner challenged the proceedings before the Calcutta High Court.
Petitioner’s Arguments
The petitioner primarily contended that:
Rule 96(10) had already been omitted by Notification dated 08.10.2024,
and therefore no proceedings could survive thereafter based solely upon alleged contravention of such Rule.
It was argued that:
once a rule is omitted,
the rule is treated as if it never existed,
unless there exists a specific saving clause preserving pending proceedings.
The petitioner relied heavily upon:
Rayala Corporation (P) Ltd. v. Director of Enforcement,
Kolhapur Canesugar Works Ltd. v. Union of India,
Hikal Limited v. Union of India,
and Addwrap Packaging Pvt. Ltd. v. Union of India.
The petitioner specifically argued that:
Section 6 of the General Clauses Act applies only to repeal of Central Acts or Regulations,
and not to omission of rules.
Therefore:
in absence of saving clause,
pending proceedings automatically lapse.
Department’s Stand
The department argued that:
Rule 96(10) was very much in existence when the alleged contravention occurred,
refund had been wrongly availed during subsistence of the Rule,
and omission of Rule 96(10) was only prospective.
The department further contended that:
Rule 96(10) was introduced to prevent encashment of accumulated ITC,
and to ensure that refund was granted only where tax-paid inputs were used in exports.
The adjudicating authority also relied upon:
Circular No. 45/19/2018-GST,
legislative intent behind Rule 96(10),
and the proposition that refund is not an unfettered right.
The department attempted to distinguish omission of Rule from retrospective invalidation.
Central Legal Issue Before the Court
The core question before the Court was:
Whether proceedings initiated under Section 74 solely for alleged contravention of Rule 96(10) could continue after omission of Rule 96(10) from the statute book, in absence of any saving clause?
The answer to this issue required the Court to examine:
distinction between repeal and omission,
applicability of Section 6 of the General Clauses Act,
and effect of deletion of delegated legislation.
Court’s Analysis on Effect of Omission of Rule 96(10)
The Calcutta High Court held that the entire proceedings fundamentally proceeded only on the basis of alleged contravention of Rule 96(10).
The Court observed that once Rule 96(10) stood omitted by Notification No. 20/2024:
continuation of proceedings based solely on such Rule became impermissible.
The Court specifically noted that:
the omission notification did not contain any saving clause preserving pending proceedings.
This aspect became decisive.
Reliance on Supreme Court Judgment in Rayala Corporation
The Court extensively relied upon the Supreme Court judgment in Rayala Corporation (P) Ltd. v. Director of Enforcement.
In Rayala Corporation, the Supreme Court had held that:
Section 6 of the General Clauses Act applies only to repeal,
and not to omission of a rule.
The Supreme Court had categorically observed:
“Section 6 only applies to repeals and not to omissions, and applies when the repeal is of a Central Act or Regulation and not of a rule.”
The Calcutta High Court applied this principle directly to Rule 96(10).
Reliance on Kolhapur Canesugar Works Ltd.
The Court thereafter relied upon the Constitution Bench judgment in Kolhapur Canesugar Works Ltd. v. Union of India.
The Supreme Court in Kolhapur Canesugar had held that:
omission of a rule obliterates it from the statute book,
and Section 6 of the General Clauses Act does not apply to omission of rules.
The Supreme Court had also clarified that:
a “rule” cannot be equated with a “Central Act” or “Regulation” for purposes of Section 6.
The Calcutta High Court adopted this reasoning and held that:
omission of Rule 96(10) had the effect of wiping out the Rule from the statute book.
Reliance on Hikal Limited and Other High Court Decisions
The Court also referred to:
Hikal Limited (Bombay High Court),
Addwrap Packaging Pvt. Ltd. (Gujarat High Court),
and Vinayak International Housewares Pvt. Ltd. (Delhi High Court).
The Bombay High Court in Hikal Limited had already held that:
upon omission of Rule 96(10),
all pending proceedings,
including pending SCNs and appeals,would stand lapsed in absence of saving clause.
The Calcutta High Court expressly agreed with this reasoning.
Court’s Final Findings
The Court ultimately held that:
the entire proceedings were founded solely upon alleged contravention of Rule 96(10),
Rule 96(10) had already stood omitted,
the omission notification did not contain any saving clause,
Section 6 of the General Clauses Act was inapplicable,
and therefore continuation of proceedings was impermissible.
The Court accordingly quashed:
the order-in-original dated 04.02.2025,
and all consequential proceedings.
Important Jurisprudential Principles Emerging from the Judgment
The judgment lays down several extremely important principles:
Omission of Rule Without Saving Clause Ends Pending Proceedings
Where a rule is omitted:
and no saving clause exists,pending proceedings based solely on such rule cannot survive.
Section 6 of General Clauses Act Does Not Apply to Omission of Rules
The judgment strongly reiterates that:
Section 6 applies only to repeal of Central Acts or Regulations,
not to omission of delegated legislation/rules.
Omitted Rule Is Treated as Non-Existent
The Court reaffirmed the settled principle that:omission obliterates the rule from the statute book as if it never existed.
Pending Proceedings Also Get Affected
The Court specifically accepted that:
pending SCNs,
adjudication proceedings,
and appealsalso lapse upon omission of the Rule.
Practical Impact of the Judgment
This judgment is likely to have massive consequences for GST litigation involving:
Rule 96(10),
Advance Authorisation exports,
IGST refund disputes,
and alleged double-benefit cases.
The ruling substantially strengthens the position of exporters facing:
pending SCNs,
pending adjudications,
pending appeals,
or even writ proceedingsarising solely from Rule 96(10).
The judgment may also have broader implications in future cases involving:
omission of delegated legislation,
sunset clauses,
and retrospective continuation of proceedings after deletion of rules.
Conclusion
The Calcutta High Court judgment in Techno Waxchem Private Limited is one of the most significant rulings delivered on the effect of omission of Rule 96(10) under GST.
The Court has categorically held that once Rule 96(10) stood omitted without any saving clause:
all pending proceedings founded solely on alleged contravention of such Rule automatically lapse.
The judgment reinforces the settled constitutional and statutory principles laid down by the Supreme Court in:
Rayala Corporation,
and Kolhapur Canesugar Works Ltd.
Most importantly, the ruling strongly reiterates that:delegated legislation cannot continue to operate after omission unless specifically preserved by statutory saving provisions.
The judgment is therefore likely to become a leading precedent for exporters and taxpayers facing pending Rule 96(10) disputes across the country.
Disclaimer
The information contained in this article is for general informational purposes only and does not constitute legal, tax, or professional advice. Each case requires specific evaluation based on facts and applicable laws. Readers are advised to seek professional advice before taking any action.