GST Relief: No Arrests, E-Way Bill Reforms & ₹10,000 SCN Limit
CBIC Announces Major GST Relief: No Arrests, E-Way Bill Reforms & ₹10,000 SCN Limit – Instruction No. 02/2026-GST | Dated: 30 October 2026
The Central Board of Indirect Taxes and Customs (CBIC) has issued Instruction No. 02/2026-GST dated 30 October 2026 to implement certain recommendations made during the 57th GST Council meeting held on 8 October 2026, even before the required amendments to the GST legislation are enacted.
The GST Council had recommended several taxpayer-friendly reforms, including withdrawal of arrest powers under GST, rationalisation of e-way bill interception and verification procedures, and introduction of a minimum monetary threshold of ₹10,000 for issuing show cause notices under Sections 73, 74 and 74A of the CGST Act, 2017.
Although these reforms require amendments to the CGST Act and corresponding State GST laws, the Council had recommended that the legislative changes take effect from 1 April 2027. As an interim measure, the Central Government has directed CBIC field formations to implement the specified reforms immediately, pending the commencement of the legislative amendments.
The key instructions are discussed below.
1. No Further Arrests under GST by CGST Field Formations
The GST Council recommended the withdrawal of arrest powers under GST by omitting Section 69 of the CGST Act, 2017.
Acting on this recommendation, CBIC has directed all Central GST field formations that no further arrests shall be carried out under GST.
This direction is intended to reduce hardships faced by taxpayers and make GST enforcement more taxpayer-friendly.
2. Rationalisation of E-Way Bill Interception and Verification: The GST Council recommended changes to Sections 68, 129 and 130 of the CGST Act, 2017, to prevent unnecessary interception of vehicles and streamline the verification of goods in transit.
Accordingly, CBIC has issued the following directions:
(i) Interception Only on Specific Intelligence: A vehicle carrying goods can be intercepted only on the basis of specific intelligence.
Such interception must be authorised by an officer not below the rank of Joint Commissioner, who must record in writing the reasons to believe that the goods are being transported in violation of the CGST Act, 2017 or the rules made thereunder.
(ii) Territorial Jurisdiction for Inspection: The proper officer intercepting the vehicle may inspect the vehicle and the goods carried therein only where the supplier or recipient is registered or located within the State or Union Territory falling under that officer’s jurisdiction.
If the inspection establishes that the goods being transported or stored during transit are in contravention of the GST law, the proper officer may detain or seize the goods in accordance with Section 129 of the CGST Act, 2017.
(iii) Procedure Where Supplier and Recipient Are Outside the Officer’s Jurisdiction: Where neither the supplier nor the recipient is registered or located within the State or Union Territory of the jurisdiction of the authorising officer, and the intercepting officer forms a prima facie opinion that the goods are being transported in violation of the CGST Act, the officer must:
- Allow the vehicle and goods to proceed without obstruction.
- Forward the relevant information to the proper officer having jurisdiction over the supplier or recipient, as applicable.
- Leave the jurisdictional officer to examine the information and take appropriate action.
(iv) Exception in Cases Where Essential Transport Documents Are Missing: An exception has been provided where:
- No e-way bill has been generated for the goods being transported; and
- No document establishing the origin or destination of the goods is produced.
In such cases, the goods or the vehicle may be inspected, detained or seized by the intercepting officer, irrespective of the jurisdiction of the supplier or recipient.
(v) No Unauthorised Detention or Seizure: Goods and vehicles in transit cannot be detained or seized for reasons other than those specifically permitted under the instructions.
(vi) No Confiscation under Section 130 During Transit: The instructions expressly provide that goods or vehicles in transit shall not be confiscated under Section 130 of the CGST Act, 2017.
3. Minimum ₹10,000 Threshold for Issuance of Show Cause Notices: To reduce low-value litigation and minimise compliance costs for taxpayers, the GST Council recommended amendments to Sections 73, 74 and 74A of the CGST Act, 2017, providing for a minimum monetary threshold of ₹10,000 for issuing show cause notices.
Pending the legislative amendments, CBIC has directed that show cause notices shall not be issued where the amount involved is below ₹10,000.
For determining this threshold, the aggregate amount under the following GST laws and applicable cess is to be considered:
- Central Goods and Services Tax (CGST) Act, 2017;
- State Goods and Services Tax (SGST) Act, 2017;
- Integrated Goods and Services Tax (IGST) Act, 2017;
- Union Territory Goods and Services Tax (UTGST) Act, 2017; and
- Goods and Services Tax (Compensation to States) Act, 2017.
Accordingly, the ₹10,000 threshold is to be calculated by considering the combined amount under the applicable GST enactments and compensation cess, rather than examining each tax component independently.
4. Monitoring of Implementation: The Principal Chief Commissioners and Chief Commissioners have been requested to monitor the implementation of these instructions.
Any difficulties encountered in implementing the directions are to be brought to the notice of the CBIC.
The Board has also requested the GST Council Secretariat to circulate the instructions to State GST formations. The respective State authorities may issue similar directions within their jurisdictions, if considered appropriate, to ensure uniform implementation.
5. Effective Period of the Instructions: These instructions shall remain in force until the amendments to the CGST Act, 2017, as recommended by the 57th GST Council meeting, come into effect.
The Council had recommended that the legislative amendments may become effective from 1 April 2027. Until then, the interim directions are to be followed by the CBIC’s Central GST field formations.
Key Takeaways
The CBIC’s latest instructions introduce significant interim relief for GST taxpayers:
- GST arrests: No further arrests are to be carried out by CGST field formations.
- E-way bill checks: Vehicle interception is restricted to cases involving specific intelligence and authorisation by an officer of at least Joint Commissioner rank.
- Jurisdictional restrictions: Inspection and further action are generally limited to cases where the supplier or recipient falls within the relevant State or Union Territory jurisdiction, subject to the specified exception.
- Detention and seizure: Unauthorised detention or seizure of goods and vehicles in transit is prohibited.
- Confiscation: Goods and vehicles in transit cannot be confiscated under Section 130.
- Small-value disputes: Show cause notices under Sections 73, 74 and 74A are not to be issued where the aggregate amount involved is below ₹10,000.
These measures represent an important step towards reducing unnecessary enforcement action, improving the movement of goods across States and lowering the compliance burden on businesses.
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