In a major relief for India’s exporters, the Bombay High Court has struck down show cause notices and recovery orders that were issued under the Goods and Services Tax (GST) rules. The ruling relates to the controversial Rule 96(10) of the CGST Rules, which for years had restricted exporters from claiming certain tax rebates and became the subject of widespread litigation.
With this judgment, exporters will now be able to claim refunds of amounts they had paid during investigations or deposited as part of appeals. Such refunds must be given along with interest and other reliefs, allowing exporters to file claims without delay.
Why Rule 96(10) Was Contentious
Rule 96(10) stopped exporters from claiming rebates of Integrated GST (IGST) paid on exports if they had also availed certain duty benefits. This led to confusion and repeated disputes between exporters and the tax department. The rule was eventually deleted after discussions in the GST Council.
The High Court noted that once the rule was omitted, and since there was no “savings clause” to protect past actions, all pending proceedings under it automatically fell.
Referring to the General Clauses Act, the judges said there was no legal basis to continue with the old cases once the rule was gone.
What the Court Said
Importantly, the Court avoided ruling on whether Rule 96(10) was constitutional. It explained that courts should not get into bigger constitutional issues when a case can be decided on simpler grounds. By doing so, it quashed the pending proceedings and gave relief to exporters.
Expert View
An tax advocate who represented many exporters in the case, welcomed the decision.
“This is a game-changing relief for Indian exporters who have faced uncertainty for years. The Court has rightly recognized that once Rule 96(10) was omitted without a savings clause, the pending proceedings could not be sustained. Exporters must now move quickly to file refund claims and seek interest on such payments,” he said.
Boost for Exporters
Industry watchers believe this ruling will help exporters improve their cash flow at a time when global trade is under pressure due to tariff barriers and supply chain challenges. Legal experts also see it as an important precedent: if a rule is deleted without protection for old cases, such cases cannot continue.
The dispute over Rule 96(10) had dragged on for years, involving multiple rounds of notices and appeals. With this judgment, exporters not only get relief in Maharashtra but also a persuasive precedent that could help in similar disputes across the country.
Exporters are now preparing to file refund applications, and many expect the government to soon issue clarifications to ensure a smooth process.
For India’s trade community, this ruling marks a turning point—removing a long-standing uncertainty and strengthening the competitiveness of Indian exporters in global markets.
Source from: https://www.cnbctv18.com/economy/bombay-hc-quashes-tax-notices-against-exporters-clears-way-for-refunds-19672427.htm
