Major Relief for Taxpayers: Analyzing Landmark Rulings on GST Refunds and Unjust Penalties | 96(10)

1. Gujarat High Court Ruling on the Deletion of Rule 96(10)
This was the central topic of discussion, focusing on a landmark judgment by the Gujarat High Court.
The Problem: Rule 96(10) of the CGST Rules restricted exporters who had an Advance Authorisation (AA) or EPCG scheme from claiming a GST refund via the "payment of tax" route. They were forced to use the "Letter of Undertaking (LUT)" route, which caused significant financial hardship, especially when only a small portion of their inputs were imported duty-free.
The Government's Action: The government deleted Rule 96(10) effective from October 8, 2024.
The Core Legal Question: Does this deletion apply retrospectively to cases that were pending before this date?
The High Court's Verdict: The Gujarat High Court ruled that the omission of Rule 96(10) will apply to all pending proceedings. This includes cases at the adjudication (show-cause notice) stage, appellate level, or pending before the High Court itself.
Key Reasoning: The court's decision was primarily based on the fact that the notification deleting the rule did not contain a "saving clause." A saving clause is a provision that allows past proceedings to continue even after a law is repealed. In its absence, the court concluded that the legislative intent was for all pending litigation under the now-omitted rule to be abated (nullified). The amendment was deemed "curative" in nature, meant to correct a hardship.
2. Delhi High Court Ruling on Interest & Penalty (Sony India Case)
A second important judgment from the Delhi High Court was discussed.
The Scenario: A taxpayer voluntarily paid a disputed tax amount to "buy peace of mind." Later, a CBIC clarification confirmed that no tax was actually payable on that transaction. Despite this, the department continued to pursue the taxpayer for interest and penalty on the amount that was originally paid.
The Verdict: The High Court quashed the interest and penalty proceedings. It held that if the principal tax liability itself is non-existent, then interest and penalty cannot be sustained. The foundation for levying interest and penalty is a valid tax liability, which was absent in this case.
3. Other Notable Points
Rectification of DRC-03: The session noted that courts generally allow for the correction of clerical errors in Form DRC-03 (e.g., selecting the wrong financial year for a payment). As long as the tax has been paid to the government, procedural errors can be rectified.
Binding Nature of Court Judgments: The speakers criticized the departmental practice of refusing to follow a High Court's binding judgment by simply stating they "do not accept it" or "plan to appeal," without actually filing an appeal in a timely manner. The court noted that as long as a judgment is not stayed, it must be followed.

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