Facts of the Case

M/s. Flowserve Microfinish Valves Private Limited, an exporter, sought a declaration that the Customs authority was the proper officer to sanction and disburse its IGST refund in terms of Rule 96(3) of the CGST Rules, and challenged the suspension of its Import Export Code, related communications, and a show cause notice dated 29.12.2021 issued in connection with alleged ineligibility for refund under Rule 96(10) of the CGST Rules, 2017.

Issues Involved

  1. Whether the show cause notice and consequential proceedings, founded on Rule 96(10) restricting IGST refund on exports made using certain concessional imports, could survive after the rule was struck down/omitted.
  2. Whether the petitioner was entitled to disbursement of the IGST refund along with applicable interest.

Petitioner's Arguments

  • The petitioner's case was directly and squarely covered by the Karnataka High Court's own decision in M/s. Hikal Limited v. Union of India and Others (W.P.No.15251/2020, dated 09.12.2025), where identical relief had been granted.
  • Rule 96(10) of the CGST Rules had been struck down by multiple High Courts, including the Kerala and Bombay High Courts, and had itself been omitted by the Government vide Notification dated 08.10.2024.

Respondent's Arguments

  • The respondents contended that there was no merit in the petition and that it was liable to be dismissed.

Court Order / Findings

  • The Court held that, in view of the striking down of Rule 96(10) by coordinate High Courts, and its subsequent omission by the Government vide Notification dated 08.10.2024, the impugned show cause notice and all further proceedings founded on that rule could not survive.
  • Applying its own decision in M/s. Hikal Limited, the Court allowed the petition, quashed the impugned show cause notice dated 29.12.2021 and all proceedings pursuant thereto, and directed the respondent authorities to refund the amount payable to the petitioner, along with applicable interest, within three months.

Important Clarification

  • Show cause notices and refund-denial proceedings founded on Rule 96(10) — which restricted IGST refund on export of goods where certain concessional-duty imports were availed — cannot be sustained once the rule has been struck down by High Courts and formally omitted by the Government; such proceedings are liable to be quashed and the withheld refund released with interest.

Sections Involved

  • Rule 96(10) of the CGST Rules, 2017 (now omitted) — previously restricted refund of IGST paid on export of goods where inputs were procured availing certain notified concessions.
  • Rule 96(3) of the CGST Rules, 2017 — governs the procedure for grant of IGST refund on export of goods.
  • Section 54(6) of the CGST Act, 2017 read with Rule 91 of the CGST Rules, 2017 — provisional refund mechanism.

Decision – In Favour of

Assessee. The show cause notice and consequent proceedings were quashed, and refund with interest directed.

Case Details

High Court of Karnataka at Bengaluru; WP No. 24491 of 2021 (T-CUS); Coram: Justice S.R. Krishna Kumar; Order dated 09.12.2025.

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