This batch of appeals and special leave petitions concerns whether the omission of sub-rule (10) of Rule 96 of the Central Goods and Services Tax (CGST) Rules, 2017—which restricted the refund of integrated tax paid on exported goods and services—applies to all pending proceedings as of the date of its omission. The Supreme Court held that since the provision was omitted without a saving clause or a sunset clause, and because the GST Council’s recommendation for prospective application is merely advisory, the omission completely obliterates the rule from the statute book for pending actions. Consequently, the Supreme Court dismissed the appeals and upheld the High Court’s view, bringing finality and closure to nationwide litigations surrounding this issue.
- Core Legal Question:
- Whether sub-rule (10) of Rule 96 of the CGST Rules, omitted by Notification No. 20/2024 effective October 8, 2024, inures to the benefit of assessees in pending proceedings regarding the refund of integrated tax on exports without the restrictions previously imposed by the sub-rule.
- Arguments of the Parties:
- Assessees / Respondents: Argued that the omission of the sub-rule without any saving clause means it applies squarely to all pending proceedings, as the effect of deleting a provision under common law is to completely obliterate it from the statute book as if it never existed (relying on Kolhapur Canesugar Works Ltd. v. Union of India).
- Union of India / Department: Relied on the 54th GST Council meeting’s recommendations, which suggested that the omission should apply prospectively because the rule was deleted due to “unnecessary complications”.
- Supreme Court’s Analysis and Findings:
- Absence of Saving Clause: The Court emphasized that the legislature did not incorporate a saving clause or a sunset clause when omitting Rule 96(10).
- Advisory Nature of Council Recommendations: The recommendations of the GST Council are purely advisory and do not legally bind the rule-making authority to enforce prospective application.
- Obliteration of Omitted Rules: Applying the Constitution Bench precedent in Kolhapur Canesugar Works, the Court reiterated that an omitted rule ceases to exist for pending actions unless a legal fiction or saving provision is explicitly enacted to keep it alive. The intention behind omitting a provision that caused “unnecessary complications” could not be to keep those very complications alive for pending cases.
- Final Directions:
- The appeals filed by the Union of India were dismissed, and the assessees’ challenges against the vires of the rule were dismissed as infructuous.
- The Registry of the Supreme Court was directed to send a copy of the order to all High Courts to ensure pending matters on the subject receive prompt closure.
