Instruction No. 02/2026-GST: no arrests, narrower e-way bill checks and no notice below ₹10,000 ahead of the CGST amendments

The GST Council, at its 57th meeting on 8 October 2026, recommended three reforms to enforcement under the Central Goods and Services Tax Act, 2017 (CGST Act): withdrawing the power of arrest, rationalising the interception and verification of conveyances under the e-way bill provisions, and a minimum threshold of ₹10,000 below which no show cause notice is issued. Each needs an amendment to the CGST Act and to the State GST Acts, and the Council recommended that the amended provisions come into force from 1 April 2027.

CBIC has not waited for the amendments. Instruction No. 02/2026-GST dated 30 October 2026, issued by the GST Policy Wing to all Principal Chief Commissioners and Chief Commissioners of Central Tax, directs field formations to apply the three reforms now, as an interim measure of trade facilitation. The instruction stays in force until the CGST Act amendments recommended at the 57th meeting come into force. The following sets out each direction and the points it leaves open.

The Council’s wider recommendations are covered in the overview of the 57th meeting.

No further arrests

The Council recommended withdrawing arrest powers under GST by omitting section 69 of the CGST Act. Para 3.1 of the instruction directs all CGST field formations that no further arrests may be carried out under GST.

Section 69 remains in the Act until it is omitted. What has changed is the Board’s direction to its own officers. For a taxpayer under investigation by a CGST formation, an arrest after 30 October 2026 would be against a written instruction of the Board, and that instruction is the first document to place before the officer and, if needed, the court. The instruction says nothing about arrests already made or proceedings arising from them.

Interception of conveyances

The Council recommended rationalising the e-way bill interception and verification procedure by amending sections 68, 129 and 130 of the CGST Act. Para 3.2 of the instruction gives field formations six directions in the meantime.

Specific intelligence and written reasons. A conveyance is to be intercepted only on specific intelligence, and the interception must be authorised by an officer not below the rank of Joint Commissioner. That officer must record in writing the reasons to believe that the goods are being transported in contravention of the CGST Act or the rules. Random stopping of vehicles to check papers does not fit within this direction.

Jurisdiction decides what the officer can do. The intercepting officer may inspect the conveyance and the goods only if the supplier or the recipient is registered in that officer’s State or Union territory, or, where unregistered, is located there. If the inspection then shows a contravention, the goods may be detained or seized under section 129.

Where neither the supplier nor the recipient is registered or located in the authorising officer’s State or Union territory, and the officer forms a prima facie view of a contravention, the officer is only to send the information to the officer with jurisdiction over the supplier or recipient. The conveyance and goods are to be allowed to pass through unhindered. The jurisdictional officer then examines the information and acts on it.

The exception. Where no e-way bill has been generated for the goods and no document showing their origin or destination is produced, the intercepting officer may inspect, detain or seize the goods or conveyance irrespective of where the supplier or recipient is. A consignment travelling with an e-way bill, or at least a document showing where it came from or where it is going, keeps the protection of the jurisdiction rule. One travelling with nothing does not.

Nothing else, and no confiscation. Goods and conveyances in transit are not to be detained or seized for any reason other than those above, and are not to be confiscated under section 130 at all.

Transporters and consignors should keep the e-way bill, or at the minimum a document of origin and destination, with every consignment, since that is now the line between a vehicle that passes and one that can be held. When a CGST officer stops a vehicle, the driver or the consignor should ask for the Joint Commissioner’s written authorisation.

Show cause notices below ₹10,000

The Council recommended amending sections 73, 74 and 74A of the CGST Act to provide, among other things, a minimum threshold of ₹10,000 for issuing show cause notices. Para 3.3 directs that show cause notices may not be issued where the amount involved is below ₹10,000.

The figure is the sum of the amounts under the CGST Act, the State GST Act, the IGST Act or the UTGST Act, and the cess under the GST (Compensation to States) Act, 2017. A demand is therefore tested on all its heads together, not tax by tax. A mismatch of ₹6,000 CGST and ₹6,000 SGST is ₹12,000, above the threshold.

Two points are not settled by the text. The instruction does not say whether “amount involved” counts only tax and cess or also interest and penalty. Its own description of the figure lists only amounts under the GST Acts and the cess, which reads as tax, but that is a reading, not a statement in the instruction. Nor does it say anything about notices already issued for small amounts before 30 October 2026. A taxpayer facing a proposed show cause notice from a CGST officer for a total below ₹10,000 can answer it by citing para 3.3.

Who the instruction binds

The instruction is addressed to CBIC’s own formations: the Principal Chief Commissioners and Chief Commissioners of Central Tax, and the Principal Directors General and Directors General of Central Tax. Para 4 asks the Chief Commissioners to monitor its implementation, and para 5 asks for difficulties to be reported to the Board.

State tax officers are not bound by it. A copy has gone to the Additional Secretary, GST Council Secretariat, with a request to circulate it to the State GST formations, which may, if they consider it appropriate, issue similar instructions in their own jurisdictions. Until a State does, a vehicle stopped by a State officer, or a small demand raised by a State officer, falls outside this instruction. Whether a State has issued a matching instruction is the first thing to check in any such case.

The instruction also does not amend the law. Sections 69, 129, 130, 73, 74 and 74A remain as they are until Parliament and the State legislatures amend them. It governs how CBIC’s officers use those powers in the interval, and it ends when the amendments recommended at the 57th meeting come into force.

This article is intended for educational purposes only and should not be construed as professional advice. It is based on the law as understood on the date of publication; laws and regulations are subject to change, and it may not reflect later developments. Readers are advised to consult a qualified tax professional on their specific situation before taking any action based on it. CA. Mohit Gaba takes no responsibility for any action taken or decision made on the basis of this article.