The Assistant Commissioner Of Central Tax vs. Borg Warner INDIA Technical Center
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The respondent, Borg Warner India Technical Center Private Limited, filed a refund application for IGST amounting to ₹3,08,78,921/- under Section 16 of the IGST Act. The Assistant Commissioner issued a show cause notice proposing to reject the refund based on Rule 96(10) of the CGST Rules. Subsequently, the Proper Officer rejected the refund application, citing Rule 96(10). The respondent filed a writ petition challenging this order and Rule 96(10) itself as ultra vires. The learned Single Judge allowed the petition, directing the grant of refund, following a previous High Court decision. The Revenue appealed this order, with a delay of 139 days, which was condoned.
Held
The Court held that the appeal filed by the Revenue was without merit. It relied on the Supreme Court's decision in Goodluck India Limited and Another vs. Union of India and others, which in turn followed a Constitution Bench decision in Kolhapur Canesugar Works Ltd. v. Union of India. The Supreme Court had authoritatively settled that proceedings under an omitted rule cannot be continued, especially when there is no savings clause or sunset clause. The Court noted that the omission of Rule 96(10) was intended to end unnecessary complications, and the absence of a savings clause indicated an intention to bring finality to such matters. Therefore, the Court found no ground to interfere with the Single Judge's order directing the grant of refund. The appeal was dismissed.
Key Issues
1. Whether Rule 96(10) of the CGST Rules, 2017, which was subsequently repealed, could be applied to deny a refund claim that arose prior to its repeal, considering the absence of a savings clause or sunset clause. Petitioner's Arguments (Revenue): The Revenue argued that the learned Single Judge erred in allowing the refund. They relied on the Supreme Court's decision in Goodluck India Limited and Another vs. Union of India and others, which held that proceedings under an omitted rule cannot be continued without a savings clause. Respondent's Arguments: The respondent contended that Rule 96(10) was ultra vires Section 16 and 22 of the IGST Act and violative of Article 14 of the Constitution. They also relied on an earlier decision of the High Court in M/s Hikal Limited vs. Union of India and others, which had directed the grant of refund.
Sections Cited
Section 16, Section 22, 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 139 days in filing the appeal is condoned.
The Revenue has filed the present appeal impugning the order dated 18.12.2025 passed by the learned Single Judge in WP.No.8940/2025 (T-RES). The respondent had filed the said writ petition, inter alia, impugning Rule 96(10) the Central Goods and Service Tax, Rules 2017 [the CGST Rules] as ultra vires of HC-KAR
CNR: KAHC010375062026 NC: 2026:KHC:52862-DB Section 16 and 22 of the Integrated Goods and Services Tax Act, 2017 [IGST Act] and violative of Article 14 of the Constitution of India.
The respondent filed an application in the prescribed form claiming refund of IGST amounting to `3,08,78,921/- under Section 16 of the IGST Act. In connection with the said application, the juri ictional Assistant Commissioner issued a show cause notice dated 10.10.2024 proposing to reject the respondent's application for refund on the basis of Rule 96(10) of the CGST Rules. Thereafter on 14.11.2024, the Proper Officer passed an order rejecting the respondent’s application for refund by referring to Rule 96(10) of the CGST Rules.
The respondent filed a petition, inter alia, impugning the said order as well as challenging Rule 96(10) of the CGST Rules. The learned Single Judge allowed the petition, following an earlier decision of this Court in M/s Hikal Limited vs. Union of India and others1 and directed grant of refund.
1 Writ Petition 15251/2020 dated 09.12.2025 HC-KAR
CNR: KAHC010375062026 NC: 2026:KHC:52862-DB
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 2 2026 SCC OnLine SC 1523 3 (2000) 2 SCC 536 HC-KAR
CNR: KAHC010375062026 NC: 2026:KHC:52862-DB 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.
The pending interlocutory application also stands disposed of. (VIBHU BAKHRU) CHIEF JUSTICE (K.S. HEMALEKHA) JUDGE List No.: 2 Sl No.: 12
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.