Chandrasekhar Kutty, Founding Partner, Sashthi Taxlegal Advisory Services LLP | GST Litigation • Advisory • Appellate Representation | Hosur • Bengaluru
27 October 2026
The Board now accepts that the omission of rule 96(10) of the CGST Rules takes effect retrospectively from 23 October 2017, the date the rule was first introduced. All pending proceedings under rule 96(10) are to be dealt with on that footing, and the same treatment extends, mutatis mutandis, to the omission of rules 89(4A) and 89(4B).
Background
Rule 96(10) barred exporters who had procured inputs under specified concessional or exemption notifications (Advance Authorisation, EOU, merchant export at 0.1%, etc.) from exporting on payment of IGST and claiming refund. It was omitted prospectively from 08.10.2024 by Notification No. 20/2024-Central Tax, following the 54th GST Council meeting. The department nevertheless continued to pursue demands for the period 23.10.2017 to 07.10.2024.
What changed
The Supreme Court, by its judgment dated 06.08.2026 in SLP (C) No. 24550 of 2025, Goodluck India Limited v. Union of India, held that an omission of a rule without a saving or sunset clause applies to all proceedings pending on the date of omission. The Court relied on the Constitution Bench ruling in Kolhapur Canesugar Works Ltd v. Union of India [(2000) 2 SCC 536] that section 6 of the General Clauses Act, 1897 does not apply to the omission of a rule. Where a rule is omitted, pending proceedings can continue only where there is an express provision for their continuance.
Why it matters for litigants
- Every show cause notice, order-in-original and appeal pending on rule 96(10) as on 08.10.2024 is now liable to be dropped.
- Refunds sanctioned and later sought to be recovered as “erroneous” under rule 96(10) are no longer recoverable on that ground.
- Where tax, interest or penalty has already been paid under protest or under recovery, a refund claim should be examined within the limitation under section 54.
- The same logic applies to the rule 89(4A) and 89(4B) restrictions on LUT-route refunds, a point many exporters had overlooked.
What remains open
The circular does not say what happens to orders that attained finality before 08.10.2024 and were never appealed. That question remains open and will have to be argued case by case.
What exporters should do now
- Seek dropping of every pending rule 96(10), 89(4A) or 89(4B) proceeding citing Circular 264/10/2026-GST and Goodluck India.
- Examine refund of amounts paid under such proceedings, with interest.
- Raise the circular as an additional ground in pending first appeals and Tribunal appeals.
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For advice on how this circular affects your business or a pending dispute, write to contact@sashthitaxlegal.com or call +91 99521 84110.
Source: CBIC Circular No. 264/10/2026-GST dated 26.10.2026, F. No. CBIC-20001/2/2026-GST. This article is for general information and does not constitute professional advice. Readers should obtain specific advice before acting on any matter discussed here.