Commissioner/Additional Commissioner Of Central Tax vs. M/S INDIA Agro Exports Private Limited

Held

The Court held that the deletion of Rule 96(10) of the CGST Rules, 2017, is retrospective. The Court relied on a recent Supreme Court decision in Goodluck India Limited and Another vs. Union of India and others, which followed a Constitution Bench decision in Kolhapur Canesugar Works Ltd. v. Union of India. The Supreme Court held that proceedings under an omitted rule cannot be continued if there is no savings clause or sunset clause. The Court noted that the omission of Rule 96(10) was to end unnecessary complications and that the legislature did not include any saving clause. The Court also referred to a clarification from the Central Board of Indirect Tax and Customs dated 26.10.2026, which stated that the omission of Rule 96(10) would be effective retrospectively from 23.10.2017. Consequently, the Court found no grounds to interfere with the learned Single Judge's order directing the processing of the refund. The appeal was dismissed.

Facts

The Revenue (Commissioner/Additional Commissioner of Central Tax and others) filed a writ appeal challenging an order passed by a learned Single Judge. The Single Judge had directed the proper officer to sanction the refund due to the respondent, M/s. India Agro Exports Private Limited, following Rule 96(3) of the CGST Rules, 2017. The respondent's refund had been withheld by letters dated 08.02.2021 and 05.03.2021, citing Rule 96(10) of the CGST Rules. The respondent argued that the subsequent deletion of Rule 96(10) by a notification dated 08.10.2024 should apply retrospectively, while the Revenue contended it was prospective.

Key Issues

1. Whether the deletion of Rule 96(10) of the CGST Rules, 2017, by a notification dated 08.10.2024, is retrospective in application, thereby impacting proceedings initiated under the said rule prior to its deletion. The Petitioner (Revenue) argued that the deletion of Rule 96(10) was prospective, meaning it would only apply to future actions and not to the refund withholding that occurred before the deletion. They relied on the general principle that amendments are prospective unless expressly stated otherwise. The Respondent (M/s. India Agro Exports Private Limited) contended that the notification deleting Rule 96(10) should be applied retrospectively. They argued that the rule was deleted because it was causing unnecessary complications and that proceedings under an omitted rule could not be sustained. They relied on the principle that proceedings under an omitted rule cannot be continued, especially in the absence of a savings clause.