Gujarat High Court’s Judgment Delivers Justice: IGST Refunds Unlocked

India’s tax regime, especially for exporters, has seen a pivotal judicial development through the Gujarat High Court’s ruling in Cosmo Films Limited vs. Union of India. As lead counsel in the case. Gujarat high court’s judgment delivers justice which unlocked IGST refunds.

Legal Context and Issue

Rule 96(10) barred certain exporters from claiming IGST refunds if they availed of schemes like Advance Authorization or duty exemptions. Although aimed at preventing dual benefits, its strict application caused genuine exporters to suffer delays and rejections in refund claims, sparking prolonged litigation.

In earlier stages, the Gujarat High Court had provided interim relief in the Cosmo Films case. The key issue in the final hearing revolved around the continued legality of adjudications and show cause notices issued under a rule that has now been removed.

Key Judicial Findings

The Court did not address the constitutional question around Rule 96(10). Instead, it took a practical view of Notification No. 20/2024-Central Tax, which deleted the rule effective from 8 October 2024. Although the notification stated a prospective application, the Court extended its effect to all ongoing matters — including pending adjudications and notices — stating that any proceeding grounded solely in the now-deleted rule cannot be sustained.

Implications of the Decision

1. Proceedings Nullified: All show cause notices and orders based on Rule 96(10) are quashed, including matters at the appellate and adjudication stages.
2. Refunds Restored: Affected exporters become eligible for withheld IGST refunds and any amounts deposited during appeals.
3. Wider Influence: While issued by the Gujarat High Court, the judgment sets a persuasive precedent for similar cases across India.
4. Prospective Omission with Pending Relief: The Court chose a fair middle path—prospective deletion that applies to unresolved proceedings—striking a balance between legality and equity.

Conclusion

This verdict reinforces legal certainty and offers meaningful relief to the export sector. It sets a strong precedent for aligning tax enforcement with fairness and may pave the way for more taxpayer-friendly reforms.