Facts of the Case

M/s DVB Design + Engineering, a proprietorship firm registered at Bollaram, Sangareddy District, represented by its General Manager Palgutta Janga Reddy, filed Writ Petition No.33695 of 2023 before the High Court for the State of Telangana at Hyderabad. The petitioner challenged a show-cause notice dated 27.09.2023 (O.R. No.89/2023-Adjn (Medchal)) issued by the Joint Commissioner of CGST, Medchal, proposing to recover an IGST refund of INR 2,45,29,538 sanctioned by the jurisdictional proper officers under the Customs Act, 1962, along with a penalty of INR 24,52,953 and applicable interest, on the allegation that the refund had been availed in violation of Rule 96(10) of the CGST Rules, 2017. The petition, filed under Article 226, sought a writ of certiorari quashing the notice and also sought to stay proceedings under the notice pending disposal. The matter was heard on 15.12.2023 by a Division Bench of Justice P. Sam Koshy and Justice N. Tukaramji.

Issues Involved

  1. Whether the show-cause notice proposing recovery of the IGST refund, penalty and interest under Rule 96(10) of the CGST Rules was liable to be quashed.
  2. Whether the petitioner could also challenge the vires of Rule 96(10) itself, given that this relief had not been properly reflected in the relief clause of the petition as filed.

Petitioner's Arguments

  • Submitted through counsel that the petition was intended, from the outset, to also challenge the vires of Rule 96(10) of the CGST Rules, but that this relief had inadvertently not been reflected in the relief clause of the writ petition as drafted.
  • In light of this gap, sought withdrawal of the present writ petition with liberty to file a fresh petition that properly includes the challenge to the vires of Rule 96(10).

Respondent's Arguments

  • The Union of India (through the Deputy Solicitor General of India) and the CGST/CBIC respondents (through their Senior Standing Counsel) had entered appearance, but the order does not record any substantive opposition, since the matter was disposed of on the petitioner's own request for withdrawal before the merits were argued.

Court Order/Findings

  • The Court noted the petitioner's submission that the intended challenge to the vires of Rule 96(10) had not been reflected in the relief clause, and that the petitioner sought withdrawal with liberty to re-file.
  • The Court permitted withdrawal of the writ petition with liberty to file a fresh writ petition including the relief challenging the vires of Rule 96(10) of the CGST Rules.
  • The writ petition was accordingly dismissed as withdrawn, with no order as to costs, and pending miscellaneous applications were closed.

Important Clarification

  • Where a drafting gap leaves out a relief the petitioner genuinely intends to press — such as a vires challenge to a subordinate rule like Rule 96(10) of the CGST Rules — courts will readily permit withdrawal with liberty to re-file a complete petition, rather than deciding a truncated one.
  • This is a practical reminder in high-value Rule 96(10) IGST-refund-recovery matters (import-linked export incentive schemes) to ensure the prayer clause fully captures every ground, including any constitutional/vires challenge, before filing.

Sections Involved

  • Rule 96(10), CGST Rules, 2017 – restricts refund of IGST paid on exports of goods or services where the exporter has availed certain concessional import/export schemes, and forms the basis of the recovery notice challenged here.
  • Article 226, Constitution of India – writ jurisdiction invoked to challenge the show-cause notice and, in the fresh petition contemplated, the vires of Rule 96(10) itself.

Decision – In Favour of

The withdrawal leaves the underlying demand of over Rs.2.45 crore, along with the proposed penalty and interest, intact for the time being. This is a procedural disposal at the petitioner's own instance and cannot be said to favour either the Assessee or the Department on merits — liberty was granted to the Assessee to re-agitate the full challenge, including the vires of Rule 96(10), in a fresh petition.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court for the State of Telangana at Hyderabad
  • Case No.: Writ Petition No.33695 of 2023
  • CNR: Not available on record
  • Coram: Hon'ble Sri Justice P. Sam Koshy and Hon'ble Sri Justice N. Tukaramji
  • Decision Date: 15 December 2023
  • Disposal Nature: Dismissed as withdrawn, with liberty to file a fresh writ petition including the challenge to vires of Rule 96(10) of the CGST Rules

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