Allahabad High Court Grants Interim Stay on Show Cause Notice Premised on Omitted Rule 96(10) of CGST Rules, 2017
Case Reference
A.G. Industries Vs Union of India And 6 Others
Court: Allahabad High Court
Nature of Relief: Stay on Show Cause Notice | IGST Refund Recovery Dispute
Background and Context
In a significant development under Goods and Services Tax law, the Allahabad High Court has stepped in to provide interim relief to a manufacturer exporter who was confronted with a show cause notice demanding recovery of IGST refund — a notice that was conspicuously grounded in a rule that had already ceased to exist in law.
The case revolves around Rule 96(10) of the Central Goods and Services Tax Rules, 2017, which was omitted with effect from 08.10.2024. Despite this formal deletion from the statute book, the revenue authorities proceeded to issue a show cause notice dated 13.02.2026, invoking the very same omitted provision to propose recovery of IGST refund that had been duly sanctioned to the assessee. The Court found this state of affairs serious enough to warrant immediate judicial intervention, resulting in a stay of the impugned notice.
Who Is the Assessee?
The petitioner, A.G. Industries, operates as a manufacturer exporter — an entity that produces goods and exports them directly. Such exporters are entitled under the GST framework to claim refund of Integrated Goods and Services Tax paid on their exports, a mechanism designed to ensure that exported goods are free from the burden of domestic indirect taxes, thereby enhancing their competitiveness in international markets.
In the ordinary course of its export operations, A.G. Industries had filed for a refund of IGST paid on its exports. This refund was duly sanctioned by the authorities, completing what appeared to be a straightforward and legitimate refund process.
The Controversy: A Notice Built on a Deleted Foundation
What Was Rule 96(10)?
Rule 96(10) of the CGST Rules, 2017 had, prior to its omission, placed certain restrictions and conditions on exporters who had availed specific benefits — particularly those who had claimed the benefit of specified notifications — from also claiming IGST refund on exports. The rule essentially created a bar, preventing a category of exporters from simultaneously availing both sets of benefits.
This rule was challenged on grounds of validity before the Allahabad High Court itself, with petitions pending in:
- Writ Tax No. 1534 of 2024
- Writ Tax No. 412 of 2025
These writ petitions raised substantive questions about whether Rule 96(10) was consistent with the parent legislation and whether it could validly restrict the statutory right to IGST refund.