Raj Jaggi
The Supreme Court’s order in M/s Goodluck India Limited and Another v. Union of India and Others, 2026-VIL-75-SC, Neutral Citation: 2026 INSC 821, dated 06.08.2026, is brief in length but substantial in consequence. It deals with the omission of Rule 96(10) of the CGST Rules, 2017 and its effect on pending refund proceedings relating to IGST paid on exports.
Before its omission, Rule 96(10) restricted refund of integrated tax paid on export of goods or services where specified exemption or concessional benefits had been availed. In practical terms, exporters who had exported goods on payment of IGST and claimed refund often faced denial on the ground that Rule 96(10) applied to them. This created prolonged refund disputes before different High Courts.
The Gujarat High Court, in 2025-VIL-587-GUJ dated 13.06.2025, in a batch of matters led by Messrs Addwrap Packaging Pvt. Ltd. and Another v. Union of India and Others , examined the legislative history of Rule 96(10), the difficulties faced by exporters, the GST Council recommendation and the legal effect of its omission by Notification No.20/2024-Central Tax dated 08.10.2024. The Department challenged that view before the Supreme Court, but the Gujarat High Court’s ruling has now been affirmed.
Export Refund Law Must Serve the Zero-Rating Purpose
Exports have a special place in GST because zero-rating is meant to ensure that exported goods and services do not carry the burden of domestic tax. An exporter may export under bond or letter of undertaking without payment of tax and claim refund of accumulated input tax credit, or export on payment of integrated tax and claim refund of the tax so paid. Rule 96 deals with the second route, namely refund of IGST paid on exports.
Rule 96(10) restricted this refund route where specified exemption or concessional benefits had been availed. The object may have been to prevent double benefit, but in practice the rule created serious difficulties. Exporters faced denial of IGST refund even where the benefit on inputs was limited or where the alleged double benefit was not real in the manner assumed by the Department.
This background was important before the Gujarat High Court. The litigation involved live refund claims, show cause notices, Orders-in-Original and pending proceedings. Therefore, once Rule 96(10) was omitted, the real question was whether exporters should still be denied refund on the basis of a restriction that had already been removed from the rule book.
The Council Explained the Problem, but the Notification Controlled the Result
A significant development took place in the 54th GST Council meeting held on 09.09.2024. The Law Committee noticed that Rules 96(10), 89(4A) and 89(4B) were creating unnecessary complications without producing the intended benefit. It therefore recommended omission of these rules. Acting thereafter, Rule 96(10) was omitted by Notification No.20/2024-Central Tax dated 08.10.2024.
Before the Supreme Court, the Union of India relied on the GST Council recommendation to argue that the omission was intended to operate only prospectively and should not affect pending proceedings. However, the recommendation was accepted as advisory in nature. The legal consequence of omission therefore had to be tested from the actual notification and not merely from the Council’s background recommendation.
This distinction became decisive. The notification omitting Rule 96(10) did not contain any saving clause preserving pending proceedings under the deleted rule. The Council recommendation could explain why the rule was removed, but it could not keep the omitted rule alive. If the rule-making authority wanted pending matters to continue under old Rule 96(10), it had to say so expressly. Since it did not, the old restriction could not govern live refund disputes.
A Deleted Rule Needs a Saving Clause to Travel Further
The central legal principle in the judgment concerns the effect of omitting a rule without preserving its past operation. A saving clause performs an important legal function. It tells taxpayers, officers and courts that, although a provision has been repealed or omitted, specified rights, liabilities, proceedings, investigations or actions will continue under the old provision. Without such a clause, the omitted provision may not govern pending matters, especially where the provision removed is a rule and not a Central Act.
The assessees relied on Kolhapur Canesugar Works Ltd. v. Union of India, (2000) 2 SCC 536 = 2000-VIL-29-SC-CE . In that Constitution Bench decision, the Supreme Court explained that where a rule is omitted without a saving clause or legal fiction, pending proceedings under that rule cannot continue. Section 6 of the General Clauses Act, 1897 protects certain consequences arising from repeal of Central Acts and Regulations, but it does not automatically save proceedings under omitted rules.
This principle directly applied in Goodluck India . Rule 96(10) was omitted without any saving clause. No deeming fiction was created to say that pending refund proceedings would continue as if the rule still existed. Therefore, live refund disputes could not be decided by applying a restriction that had already disappeared from the rule book.
Live Disputes Are Different From Concluded Refund Matters
A clear distinction must be maintained between pending proceedings and matters that have already attained finality. The judgment does not mean that every closed refund matter can be reopened merely because Rule 96(10) has been omitted. Its focus is on live disputes, such as pending refund claims, show cause notices, adjudication proceedings, appeals or writ petitions where the controversy has not yet come to an end.
The Gujarat High Court had dealt with this point directly. The Revenue argued that writ petitions challenging the validity of Rule 96(10) should not be treated as pending proceedings for applying the benefit of omission. This argument was rejected because the petitioners had also challenged show cause notices and Orders-in-Original based on Rule 96(10). The disputes were therefore still alive and had not become final.
This distinction gives the ruling its practical balance. It does not disturb matters that are truly closed. At the same time, it prevents a deleted refund restriction from being applied to proceedings that are still pending. An omitted rule cannot continue to decide a live dispute merely because the Department had invoked it earlier.
The Reasoning Was Refined, but the Relief Remained Intact
The Gujarat High Court had held that omission of Rule 96(10) was prospective in form, but it would still apply to pending proceedings where final adjudication had not taken place. It also considered the GST Council’s recommendation, which had noticed the complications caused by Rule 96(10). The Supreme Court affirmed the result, but placed sharper emphasis on the absence of a saving clause and the principle laid down in Kolhapur Canesugar Works Ltd. v. Union of India, (2000) 2 SCC 536 = 2000-VIL-29-SC-CE .
This refinement is important. The Supreme Court did not treat the GST Council recommendation as the controlling legal source. It noted that the recommendation was advisory in nature. The decisive factor was that Rule 96(10) had been omitted without any clause preserving pending proceedings. Once the rule was removed to end unnecessary complications, keeping those very complications alive in pending matters would defeat the purpose of omission.
The Supreme Court therefore found no ground to interfere with the Gujarat High Court judgment. The Department’s appeals have been dismissed, and the benefit of omission has effectively remained available in pending refund disputes.
Constitutional Validity Did Not Need a Separate Decision
One notable feature of the litigation was that exporters had also challenged the validity of Rule 96(10). Their objections were wide-ranging. They questioned the rule on grounds such as arbitrariness, proportionality, unreasonable classification among exporters, excess of rule-making power and inconsistency with the export refund scheme. The Gujarat High Court recorded these challenges, but did not finally decide the constitutional validity of the rule because the rule had already been omitted and the benefit of omission was held applicable to pending proceedings.
The Supreme Court has followed the same practical course. Once Rule 96(10) stood omitted and could no longer govern pending refund disputes, it was unnecessary to examine whether the rule was constitutionally valid when it existed. The controversy could be resolved on the narrower and more immediate ground that the omitted rule had not been saved for pending matters.
This reflects an important judicial discipline. Courts generally avoid deciding constitutional questions when a case can be resolved on a narrower statutory ground. In Goodluck India , the decisive issue was not whether Rule 96(10) was valid or invalid during its life. The decisive issue was whether it could continue to control pending refund proceedings after its omission without any saving clause. The answer was clearly in the negative.
The Same Refund Discipline Appears in Rule 89 Omissions
The ruling may also be usefully read with Alstom Transport India Limited v. Union of India and Others, 2026-VIL-664-GUJ, dated 02.07.2026 . That decision also dealt with omission of restrictive refund provisions without a saving clause in the context of pending refund proceedings. The Gujarat High Court proceeded on the same broad principle: where a restrictive refund rule is omitted without preserving pending matters, the omitted restriction should not ordinarily be applied to live refund disputes.
This connection is important because Rules 96(10), 89(4A) and 89(4B) formed part of the same refund-restriction framework. The GST Council also considered these provisions together while recommending their omission. The common concern was that these rules had created avoidable complications in refund administration without effectively serving the intended purpose.
For exporters and professionals, the rule number is less important than the principle. If a restrictive refund provision has been removed and no saving clause preserves it, the refund authority must first examine whether the proceeding is still pending. If the proceeding is alive and the old rule has not been saved, the omitted restriction cannot be applied merely because the refund period relates to an earlier time.
Refund Scrutiny Must Now Move Beyond Omitted Rule 96(10)
The practical consequence of the Supreme Court’s judgment is significant. Pending refund claims or proceedings involving Rule 96(10) must now be examined without applying the omitted restriction. This does not mean that refund should be granted automatically. The authority may still verify other statutory requirements, including eligibility, export documents, payment of tax, limitation, procedural compliance and unjust enrichment wherever applicable.
However, a refund denial based solely on omitted Rule 96(10) cannot survive in pending proceedings. If a show cause notice, adjudication order or appeal rests only on that deleted rule, the taxpayer has a strong basis to seek relief. If there are other independent and legally permissible grounds, those grounds may still be examined. The judgment removes the Rule 96(10) obstruction; it does not remove lawful refund scrutiny.
For departmental officers, the ruling gives clear administrative direction. Pending files should be reviewed to identify whether denial has been founded on Rule 96(10). If the matter is still alive and the rule has been omitted without a saving clause, the dispute should not be continued as if the rule still exists.
Pending Rule 96(10) Litigation Now Has a Clear Direction
The Supreme Court noticed that several matters relating to Rule 96(10) were pending before different High Courts and that conflicting views had emerged. It therefore directed its Registry to send a copy of the order to all High Courts. The Registries of the High Courts were also directed to place such matters before the appropriate Benches after obtaining orders from the respective Chief Justices.
This direction has strong practical importance. The Supreme Court was not merely deciding one batch of appeals. It was conscious that the same refund controversy had travelled across the country and required uniform treatment. The direction is therefore intended to bring consistency and closure to pending litigation on the omission of Rule 96(10).
For pending litigants, the message is clear. Where the dispute concerns application of Rule 96(10) after its omission, the Supreme Court’s order should guide the result. Pending cases should no longer proceed on the assumption that omitted Rule 96(10) can still control live refund claims.
A Deleted Rule Survives Only If the Law Saves It
The broader lesson from Goodluck India lies in the importance of a saving clause. When a rule is omitted, the legal inquiry does not end with what the old rule provided. It is equally necessary to see whether the omission preserves pending rights, liabilities, actions or proceedings. A saving clause is the legal link that allows an old provision to continue for limited purposes even after it has been removed.
Rule 96(10) was omitted without such a legal link. Therefore, the old refund restriction could not continue to control pending export refund claims. This principle has special importance in GST because rules are frequently amended, substituted and omitted. The date of change, the presence or absence of saving language, and the status of the proceeding may together decide whether the old rule still has any role to play
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