Published 28 October 2026
Rule 96(10) of the CGST Rules stopped an exporter from claiming a refund of IGST paid on exports if the exporter had used certain concessional or exempt notifications for inputs. The rule was removed in 2024. The question was whether the removal took effect only from the date it was notified, or applies right from the day the rule first appeared. On 26 October 2026 the Central Board of Indirect Taxes and Customs (CBIC) issued Circular No. 264/10/2026-GST, which answers: from the beginning.
Background
- Rule 96(10) came into force on 23 October 2017. It aimed to prevent a double benefit: an exporter who had benefited from an IGST exemption on procurement under specified notifications could not also claim an IGST refund on exporting those goods.
- At its 54th meeting on 9 September 2024, the GST Council noted the difficulty this caused for exporters, and the rule was omitted with effect from 8 October 2024 by Notification No. 20/2024-Central Tax of 8 October 2024. That omission was intended to be prospective.
- Various courts have ruled on whether the omission operates retrospectively. The tax officers and taxpayers had doubts about what to do.
The Supreme Court decision
The circular refers to the judgment of 6 August 2026 of the Supreme Court in Goodluck India Limited & Anr. v. Union of India & Ors. (SLP (Civil) No. 24550 of 2025), with connected matters. As the circular records it, the Court held that, because the omission of rule 96(10) came with no saving clause or sunset clause, the omission applies to all proceedings pending on the date of omission.
The Court relied on the Constitution Bench judgment in Kolhapur Canesugar Works Ltd. v. Union of India [(2000) 2 SCC 536], which held that section 6 of the General Clauses Act, 1897 does not apply to the omission of a rule. Where a rule is omitted, proceedings under it can continue only if there is an express provision, or a legal device in the statute or rules, to keep them alive.
What the Board now says
The circular clarifies that the omission of rule 96(10) is effective retrospectively from 23 October 2017. Field formations have been advised to deal with pending proceedings under rule 96(10) in line with the Supreme Court judgment.
The same treatment applies, with necessary changes (“mutatis mutandis”), to the omission of rules 89(4A) and 89(4B).
What exporters should do
- An exporter with a pending notice, order, refund rejection or appeal based on rule 96(10), or on rules 89(4A) and 89(4B), can rely on the circular and on the judgment.
- The circular speaks of pending proceedings. It does not say how concluded matters, or refunds already paid back, are to be handled, and exporters in that position should take advice on the remedies open to them.
- The Board’s wording on retrospectivity follows the Supreme Court judgment. The notification omitting the rule was itself drafted as prospective.