Union Of INDIA vs. M/S Efd Induction PVT LTD
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The respondent, M/s. EFD Induction Pvt Ltd, a manufacturer of hardening machines, sought a refund of GST amounting to ₹57,39,201/- for the period January 2020 to December 2021 under Section 54(3)(1) of the CGST Act, read with Rule 89. The refund was denied by the concerned authority, citing a violation of Rule 96(10) of the CGST Rules, which restricted claiming input tax benefits and IGST refunds on exports simultaneously. However, Rule 96(10) was subsequently deleted by a notification dated 08.10.2024. The Revenue contended that this deletion was prospective and did not apply to the respondent's claim. The learned Single Judge had allowed the respondent's petition, following a previous High Court decision.
Held
The Court held that the Supreme Court, in its decision in Goodluck India Limited and Another vs. Union of India and others, had authoritatively settled the issue. Following a Constitution Bench decision in Kolhapur Canesugar Works Ltd. v. Union of India, the Supreme Court held that proceedings under an omitted rule could not be continued if there was no savings clause or sunset clause. The Supreme Court observed that the omission of Rule 96(10) was intended to end unnecessary complications, and without a saving clause, the rule could not be kept alive for pending proceedings. The Court found no reason to interfere with the impugned order of the learned Single Judge, which was consistent with this Supreme Court precedent. Therefore, the appeal filed by the Revenue was dismissed.
Key Issues
1. Whether the deletion of Rule 96(10) of the CGST Rules, 2017, by notification dated 08.10.2024, has retrospective effect, thereby entitling the respondent to claim a refund of IGST on exports despite having availed input tax benefits, contrary to the erstwhile Rule 96(10)? (Question of law) Contentions: Petitioner (Union of India and others): Argued that the deletion of Rule 96(10) was prospective and did not revive the respondent's claim for refund, as the original restriction under the rule was applicable during the period of claim. They relied on the Supreme Court decision in Goodluck India Limited and Another vs. Union of India and others. Respondent (M/s. EFD Induction Pvt Ltd): Relied on the learned Single Judge's order, which followed the High Court's decision in M/s Hikal Limited vs. Union of India and others, and implicitly argued that the deletion of the rule should apply to pending proceedings.
Sections Cited
Section 54(3)(1), Rule 89, Rule 96(10)
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Cause title — parties, addresses and appearances
ORAL JUDGMENT (PER: HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE)
For the reasons stated in the application, I.A.2/2026, the same is allowed. The delay of 105 days in filing the appeal is condoned.
The Revenue has filed the present appeal impugning the order dated 09.12.2025 passed by the learned Single Judge in WP.No.10540/2023 (T-RES). The respondent had filed the said petition, inter alia, impugning Rule 96(10) of the Central Goods and Services Tax Rules, 2017 [CGST Rules].
The respondent is a company engaged in the business of manufacturing hardening machines and related job works, which are used in automobiles and wind power generation machines. The respondent is also registered under the Central Goods and Service Tax Act, 2017 [CGST Act]. The respondent had secured advance authorization licences under a Foreign Trade Policy 2015-2020, whereby it was allowed to import raw materials used in manufacture of the products for exports on claiming exemption from payment of duty. HC-KAR
CNR: KAHC010301202026 NC: 2026:KHC:52863-DB
The respondent had applied for refund of tax for the period January 2020 to December 2021 amounting to `57,39,201/- under Section 54(3)(1) of the CGST Act, read with Rule 89 of the CGST Rules. The concerned authority found that the respondent had availed an input tax benefits and had also claimed refund of the IGST on exports. According to the concerned authority, this was contrary to the restrictions imposed under Rule 96(10) of the CGST Rules. However, Rule 96(10) of the CGST Rules was deleted by a notification dated 08.10.2024. It is the Revenue's case that the same is prospective and does not entitle the respondent to claim the benefit of the notification.
The learned Single Judge, following an earlier decision of this Court in M/s Hikal Limited vs. Union of India and others1 1 Writ Petition 15251/2020 dated 09.12.2025 2 2026 SCC OnLine SC 1523 HC-KAR
CNR: KAHC010301202026 NC: 2026:KHC:52863-DB issue stands authoritatively settled. The Supreme Court following the Constitution Bench decision in Kolhapur Canesugar Works Ltd. v. Union of India3 held that the proceedings under an omitted rule could not be continued. The Supreme Court found that since there was no savings clause or a sunset clause in respect of Rule 96 (10) of the CGST Rules proceedings, the said rule could not be kept alive. Paragraph 7 of the said decision is set out below:
“7. The Constitution Bench decision applies squarely in the above case. We may also observe that even going by the recommendations as extracted hereinabove, sub-rule (10) of Rule 96 was omitted because it was ‘leading to unnecessary complications without any intended benefit being served’ (sic). As fairly submitted by the learned ASG the legislature has not brought in any saving clause or a sunset clause, when sub-rule (10) of Rule 96 was omitted. The recommendation that the omission should be prospective is also advisory in nature and does not bind the rule making authority. The intention to omit the rule without any saving clause was to bring to an end, the unnecessary complications once and for all and the intention cannot be to keep alive the unnecessary complications insofar as the pending proceedings are concerned.”
In view of the above, we find no ground to interfere with the impugned order. The appeal is, accordingly, dismissed.
3 (2000) 2 SCC 536 HC-KAR
CNR: KAHC010301202026 NC: 2026:KHC:52863-DB
The pending interlocutory application also stands disposed of. (VIBHU BAKHRU) CHIEF JUSTICE (K.S. HEMALEKHA) JUDGE List No.: 1 Sl No.: 2
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.