Retrospective Application of Rule 96(10) Quashed by Gujarat High Court

Case Title: Rishi FIBC Solutions Pvt. Ltd. & Anr. v. Union of India & Ors.
Court: High Court of Gujarat at Ahmedabad
Petition No.: R/Special Civil Application No. 18199 of 2021 with Civil Application No. 1 of 2023
Judgment Date: 19.09.2024
Category of Dispute: Refund of IGST on Exports (Rule 96(10) of CGST Rules)
Relevant Sections: Section 54(3) CGST Act, 2017; Section 16 IGST Act, 2017; Rule 96(10) of CGST Rules, 2017

Facts of the Case (Para 3–24)

• The petitioner, engaged in manufacturing and export of jumbo bags and flexi tanks, imported raw materials under exemption notifications as an Export Oriented Unit (EOU) (Paras 3–7).

• They exported goods on payment of IGST and claimed refunds as per Rule 96 (Paras 5–8).

• Rule 96(10) was retrospectively amended by Notification 39/2018 to restrict refunds where EOU benefits were availed, but later withdrawn by Notification 53/2018. A fresh Notification 54/2018 made the restriction prospective from 09.10.2018 (Paras 10–15).

• Despite this, DGGI officers issued summons in 2021 alleging refund was wrongly claimed for the period 01.07.2017 to 09.10.2018, citing Cosmo Films Ltd. decision (Paras 18–22).

• Petitioners challenged the retrospective application, relying on subsequent rectification of Cosmo Films order clarifying that Notification 54/2018 is prospective (Para 26–28).

Question(s) in Consideration

1. Whether Notification No. 54/2018 amending Rule 96(10) applies retrospectively from 23.10.2017 or prospectively from 09.10.2018? (Paras 18–19, 26–28)

2. Whether recovery proceedings and summons based on retrospective application of Notification 54/2018 are valid? (Para 29)

Observations of the Court

• Earlier retrospective effect given under Notification 39/2018 was consciously withdrawn by the Government via Notification 53/2018 (Para 13–16).

• Circular 70/44/2018 clarified that refunds already sanctioned were not to be reopened (Para 16).

• In Cosmo Films Ltd., a rectification order was passed correcting the earlier mistake and holding Notification 54/2018 to be prospective from 09.10.2018 (Para 27).

• Thus, applying Notification 54/2018 retrospectively from 23.10.2017 was legally unsustainable (Para 28–29).

Judgment of the Court

• The Court held that Notification No. 54/2018 is applicable prospectively from 09.10.2018 only (Para 28).

• Consequently, summons, notices, and recovery proceedings based on its retrospective application were quashed and set aside (Para 29).

• Petition was allowed with no order as to costs (Para 30).

Between Fine Lines (5-Line Simple Summary)

• Exporters availed IGST refunds before Rule 96(10) was amended.

• The Government withdrew retrospective restrictions and clarified refunds already granted were valid.

• DGGI still attempted recovery by misapplying Notification 54/2018 retrospectively.

• Gujarat High Court clarified 54/2018 is prospective from 09.10.2018.

• Hence, all recovery and summons prior to this date were invalid.

Summary of Referred Cases

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