Omission of Rule 96(10) enures to all assessees in pending proceedings; SCN demanding recovery of IGST refund of over twelve crores set aside: Madras High Court

The Court followed the Supreme Court's ruling in Goodluck India Limited and held that without a saving clause, proceedings initiated under the omitted rule cannot be continued.

The Madras High Court has set aside two issues of a ten-issue show cause notice demanding recovery of IGST refunds aggregating over Rs. 12.85 crores, holding that the omission of sub-rule (10) of Rule 96 of the CGST Rules through Notification No. 20/2024 dated 08.10.2024 enures to the benefit of all assessees in pending proceedings [M/s Madras Hydraulic Hose (P) Ltd v. Chairman, CBIC & Ors].

Justice N. Senthilkumar, relying squarely upon the Supreme Court's Constitution Bench principle applied in Goodluck India Limited, held that if on omission of a rule there was no provision for continuance of proceedings already initiated and no legal fiction enabling such continuation, the proceedings could not be sustained.

The petitioner, a manufacturer of high-pressure hoses used in pneumatic applications, had accumulated input tax credit on account of zero-rated exports and had claimed refund under Section 54 read with Rule 89. The impugned show cause notice raised nine issues, of which Issues 1 and 2 sought recovery of alleged erroneous IGST refunds of Rs. 7,92,07,287 and Rs. 4,93,80,056 respectively for July 2017 to March 2020.

The Court also relied upon the Gujarat High Court's decision in Alstom Transport India Limited and its own earlier ruling in Global Calcium Pvt Limited, both of which had followed the Supreme Court and held that the deletion would apply to all pending proceedings.

Finding no enabling provision in the show cause notice for continuance of proceedings under the omitted rule, the Court set aside Issues 1 and 2. For the remaining Issues 3 to 10 — concerning non-reversal of ITC under Rule 42, blocked credit under Section 17(5), excess ITC not in GSTR-2A, and irregular concessional rate — the petitioner was granted liberty to file a reply within four weeks.

2026-juristway.com-2931-HC(Madras)-GST  |  High Court of Madras  |  WP No. 18301 of 2022  |  09.09.2026