“When a Rule Disappears, So Do Pending Proceedings” – Gujarat High Court Holds Omission of Rule 96(10) CGST Rules Applies to All Matters Still Alive

1. Introduction

The consolidated decision in Messrs Addwrap Packaging Pvt. Ltd. & Ors. v. Union of India & Ors. (CAV Judgment, 13 June 2025, Gujarat High Court) deals with nearly fifty writ petitions questioning the validity and application of Rule 96(10) of the Central Goods and Services Tax Rules, 2017 (“CGST Rules”) – the provision that, since 2017, denied exporters refund of IGST on exports if they or their suppliers had availed specified customs/GST exemptions on inputs.

While the Court originally heard extensive arguments on the constitutional validity of Rule 96(10), a decisive twist occurred after judgment was reserved: the Central Government, acting on the 54^th GST Council recommendation, issued Notification No. 20/2024-CT (8 Oct 2024) omitting Rule 96(10). The petitioners filed a post-reserve application asking the Court to give effect to this omission.

2. Summary of the Judgment

Omission governs pending matters. The Court held that although the Notification states the rules “shall come into force on the date of their publication”, the legal effect of omitting Rule 96(10) is to repeal it without any saving clause. Relying on Sections 6, 6-A & 24 of the General Clauses Act, 1897 and Supreme Court precedents (Fibre Boards, M. A. Tulloch), the Bench ruled that a repeal without savings extinguishes all proceedings not already concluded. Therefore, every case or enquiry still alive on 8 October 2024 instantly loses its foundation in Rule 96(10).
Refund claims revive. All challenged show-cause notices, orders-in-original or refund denials based on Rule 96(10) were quashed. Exporters are now entitled to pursue IGST refunds under the general framework of Rule 96 (sub-rules 1-9).
Validity question rendered academic. Because the rule has vanished for every live controversy, the Court declined to adjudicate on the constitutional challenges (Articles 14 & 19(1)(g), ultra vires Section 16 IGST Act, etc.).

3. Analytical Breakdown

3.1 Precedents Cited & Their Influence

Fibre Boards (2015) 10 SCC 333 – clarified that “repeal” in Section 6 GC Act includes implied repeal and repeal by “omission”.
M.A. Tulloch (1964) – doctrine that repeal, express or implied, attracts Section 6 unless a contrary intention appears.
Rayala Corporation (1969) – earlier view that Section 6 does not apply to omission of rules; distinguished as obiter.
Other SC cases on continuation of proceedings on statutory change (Kunhayammed, Matthews M. Thomas, Wall v. C&O Ry.) used to show appeals/writs are “continuing proceedings”.

The Court synthesised these authorities to hold that once Rule 96(10) is omitted without a saving clause, Section 6 operates so that “any investigation, legal proceeding or remedy” under that Rule cannot continue.

3.2 Legal Reasoning of the Bench

Nature of the Amendment. Omission equals repeal. Without an express clause safeguarding past liabilities, pending actions evaporate.
Prospective vs. Pending. Although the Notification is prospective, it does not protect incomplete matters. The date of omission only demarcates … but does not save anything not concluded.
Doctrine of Merger & Continuation. A writ petition challenging demand/SCN is an extension of original proceedings; hence still “pending”.
Resultant Relief. No legal basis survives for the impugned notices or orders; they are quashed, and exporters may re-seek refunds unshackled by the defunct rule.

3.3 Impact Assessment

Immediate: Thousands of refund disputes across India based solely on Rule 96(10) now stand nullified if not concluded before 8 Oct 2024.
Administrative: GST authorities must re-process refund applications under Rule 96(1)-(9) without invoking the barred stipulation. Recovery proceedings initiated only on Rule 96(10) grounds fall.
Policy: Reinforces GST Council’s role – its recommendations, once implemented, override ongoing litigation.
Litigation strategy: Future challenges will likely focus on substantive conditions in refund provisions (e.g., Sections 54 & 16) rather than Rule-based exclusions.

4. Simplifying Complex Concepts

Rule vs. Act: CGST Rules are delegated legislation under Section 164 of the CGST Act. An Act trumps a Rule, but here the Rule was simply removed.
Section 6, General Clauses Act: A default “saving” provision – if a law is repealed, existing liabilities & investigations survive unless Parliament shows a contrary intent. Because the Notification lacked any saving, liabilities do not survive.
Zero-Rated Supply: Exports are treated as “zero rated”; normally exporters can either ship without tax and claim ITC refund or pay tax and claim refund of that tax. Rule 96(10) restricted the latter path where duty-free inputs were used.

5. Conclusion & Key Takeaways

The Gujarat High Court’s ruling crystallises an important procedural principle: when a fiscal rule is omitted without a saving clause, all unfinished proceedings rooted in that rule are extinguished. The Court refused to travel into the constitutional thicket once the statutory foundation vanished.

For exporters, the decision unlocks IGST refunds long frozen by Rule 96(10). For tax administrators, it signals that curative policy changes, even if framed prospectively, can retro-cleanse the docket unless expressly preserved. Future legislation should therefore embed clear savings or transitional provisions when repealing contentious rules to avoid wholesale collapse of pending actions.