M/s Techno Waxchem Pvt Ltd. v. Union of India & Ors.

GST update /2026-27/0030

GST UPDATE

Proceedings initiated or order passed pending finality raised due to violation of Rule 96(10) of CGST Rules stands to be lapsed due to omission of Rule 96(10) without any saving clause.

Writ Petition No.: 13772 of 2025

Court: High Court of Calcutta (Nagpur Bench)

Case Title: M/s Techno Waxchem Pvt Ltd. v. Union of India & Ors.

Outcome: Writ Petition was allowed and impugned order was set aside

Judgement Date: 22.05.2026

BRIEF FACTS OF THE CASE:

M/s Techno Waxchem Pvt Ltd. (petitioner) primarily engaged in manufacturing and exporting of various chemical products, procures a wide range of inputs through domestic sources and international sources both. A specific input was procured through import under Advance Authorisation Scheme (AAS). Later GST was introduced w.e.f. 01.07.2017 which led to levy of IGST in place of Additional Customs Duty (ACD) and for the goods which were exported, IGST was levied. Before GST regime, refund of excise duties paid on exported goods was allowed under Rule 18 of CENVAT Excise Rules, 2002 which was subsequently replaced by Section 16(3) of IGST Act 2017 and Section 54 of CGST Act 2017 in GST regime in which every exporter had 2 options to choose from which are as follows:

1. Export under Letter of Undertaking (LUT) without payment of IGST as per Rule 89 of CGST Rules 2017)or

2. Supply of Goods or services on payment of IGST and claim refund of IGST as per Rule 96(10) of CGST Rules 2017.

The second option was later omitted through an notification w.e.f. 01.10.2023.

The petitioner availed refund of IGST on goods exported during October 2017 to March 2022 under 15 Advance Authorisation Licenses against payment of IGST. Department alleged that petitioner has contravened Rule 96(10) and has claimed refund of IGST paid on export of goods which were imported under Advance Authorisation. Hence, it was asked to submit documents to the Revenue Department which included Advance Authorisation Licenses, shipping bills, export invoices, GST returns. Response was duly filed by the petitioner, however, non-considering the response of the petitioner, summons were issued by DRI under Section 70 to the petitioner. Petitioner produced the requisite documents, however, DRC-01A was issued to him advising the petitioner to repay amount of IGST claimed as refund on export. Subsequently, SCN was issued to the petitioner on the same matter against which petitioner gave reply. However, the allegations raised by the impugned SCN was confirmed by an order under Section 74 of CGST Act.

QUESTION BEFORE HON’BLE COURT:

• Whether proceedings initiated or demand raised but which has not attained finality due to violation of a section or provision which was later omitted without any saving clause stands valid or not?

BRIEF ARGUMENTS BY PETITIONER:

Petitioner submitted following contentions: -

• Rule 96(10) was omitted by a notification no. 20/2024 w.e.f. 08.10.2024 and it claimed refund of IGST paid on export of goods during 2017 to 2022 which were duly reflected in ICEGATE portal which validates the claims and compliance with the export regulations.

• Further, argued that once a rule is deleted/omitted, the same is deemed to have been removed from the statute and therefore shall be treated as to be never in existence. Rule 96(10) was deleted w.e.f. 08.10.2024 and therefore demand could not survive. Hence, the demand alleged is invalid and without jurisdiction.

• In continuation, it was argued that once a rule is omitted ordinarily as a consequence thereof, the provision is set to be wiped out from the statute book as completely as if it had never been passed and must be considered as if it had never existed.

• The above said contentions were substantiated by placing reliance on various judicial pronouncements.

Therefore, impugned order should be set aside.

BRIEF ARGUMENTS BY REVENUE DEPARTMENT:

Revenue Department contended that:

• The refund was obtained during the existence of the rule and the show cause was also issued during the existence of the rules. Hence, there is no irregularity in the order issued.

• Furthermore, it was contended that assignment of leasehold rights in favour of another person i.e. assignee does not amount to lease or sub lease, because in such case the rights of the petitioner gets extinguished. Hence, consideration for such transaction amounts to compensation for transferring of rights in favour of the assignee. Hence, tax should be levied on such transaction @18% under GST.

• The assignment of leasehold rights is covered under Miscellaneous services and therefore taxable under Notification No. 11/2017 [CT] (rate) dated 28.06.2017.

FINDINGS & JUDGEMENT:

Following are the findings of the Court in the instant case:

• Placing reliance on High Court judgement in the case of Hikal Limited and Addwrap Packaging Pvt Ltd. in which it was held that SCNs after the date 08.10.2024 or even orders before 08.10.2024 but which have not yet attained its finality due to appeals made against the adjudicating orders are not preserved and stands to be lapsed i.e. stands to be set aside.

• Furthermore, it was observed that in the case of Rayala Corporation (P) Ltd. and M.R. Pratap in which it was held that after the omission of Rule 132-A of the DRI rules, no prosecution could be instituted even in respect of an act which was an offence when the rule was in force.

Thus, it was held that the writ petition by the petitioner is allowed and impugned order stands to be brushed aside as Rule 96(10) no longer survives.

Various Sections, Rules and case laws referred in the instant case:

Section 54, Section 74 of CGST Act 2017

Rule 89, 96(10) of CGST Rules 2017

Rayala Corporation (P) Ltd. and M.R. Pratap v. Director of Enforcement, New Delhi, [(1969) 2 SCC 412]

Addwrap Packaging (P.) Ltd. v. Union of India, [2025 175 taxmann.com 592]

Hikal Limited v. Union of India, [2025 SCC Online Bom 3169]

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