M/S. Ut Corp vs. Union Of INDIA

Held

The High Court disposed of the writ petition in terms of paragraphs 7 and 8 of the Supreme Court's judgment in M/s Goodluck India Limited & Anr. Vs. Union of India & Ors. and the subsequent Office Memorandum dated 24.08.2026. The Supreme Court had held that the omission of Rule 96(10) of the CGST Rules, 2017, without a saving clause, applies to all pending proceedings as on the date of omission. The Court reasoned that the omission was due to 'unnecessary complications without any intended benefit being served,' and the recommendation for prospective omission was advisory. The Court found no good reason to interfere with its own well-reasoned judgment, which was affirmed by the Supreme Court. The petitioner was granted liberty to file appropriate refund applications, which the competent authority was directed to consider strictly in accordance with law and decide within twelve weeks. No prejudice was to be caused to the petitioner on account of impugned orders, and the respondents were directed to decide the refund application afresh. The issue of constitutional validity of the rule was implicitly decided in favor of the petitioner based on the Supreme Court's ruling on the effect of omission.

Facts

The petitioner, M/s. Ut Corp, challenged the constitutional validity of Rule 96(10) of the Central Goods & Services Tax Act, 2017, as amended retrospectively. This rule denied refund of IGST paid on exports if the supplier had availed benefits under Notification No. 41/2017-IGST. The petitioner sought to claim this refund. The High Court noted that the Supreme Court, in M/s Goodluck India Limited & Anr. Vs. Union of India & Ors., had considered the omission of Rule 96(10) and its applicability to pending proceedings. The Government of India, Ministry of Finance, subsequently issued an Office Memorandum accepting the Supreme Court's judgment.

Key Issues

1. Whether Rule 96(10) of the Central Goods & Services Tax Act, 2017, as amended, is constitutionally valid to the extent it denies refund of IGST paid on exports where the supplier has availed the benefit of Notification No. 41/2017-IGST? (Question of law) 2. Whether the omission of Rule 96(10) of the CGST Rules, 2017, by Notification No. 20/2024 with effect from 08.10.2024, inures to the benefit of the assessee in pending proceedings, allowing refund claims without the restriction under sub-rule (10)? (Question of mixed law and fact) Petitioner's contention: The petitioner argued that the retrospective amendment to Rule 96(10) was unconstitutional and that the omission of the rule should apply to pending proceedings without any saving clause. They relied on the principle that omission of a rule obliterates it as if it never existed, unless a saving clause is provided. Respondents' contention: The respondents, represented by the Union of India and the State of Rajasthan, initially resisted the petitioner's claim. They referred to the recommendation of the 54th meeting of the GST Council for prospective omission of Rule 96(10) and relied on the Supreme Court's decision in Kolhapur Canesugar Works Ltd v. Union of India to argue for prospective application. However, the judgment indicates that the ASG fairly conceded on certain aspects.