The Central Board of Indirect Taxes and Customs (CBIC) has directed its field formations not to carry out further arrests under GST, restricted interception and inspection of goods in transit, and instructed officers not to issue show cause notices where the aggregate amount involved is below ₹10,000.

The directions have been issued through Instruction No. 02/2026-GST dated October 30, 2026, implementing specified recommendations of the 57th GST Council meeting ahead of the corresponding legislative amendments.

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The instruction also prohibits confiscation of goods or conveyances in transit under Section 130 of the Central Goods and Services Tax Act, 2017.

Interim Measures Ahead Of Legislative Amendments

According to the instruction, the GST Council, at its meeting held on October 8, 2026, recommended reforms concerning arrest powers, e-way bill verification and a minimum threshold for issuing show cause notices.

These changes require amendments to the CGST Act and corresponding State GST laws. The Council recommended that the amended provisions may come into force from April 1, 2027.

Pending those amendments, the Central Government has decided to implement the specified reforms through administrative directions to CBIC field formations. These directions will remain in force until the recommended statutory amendments come into effect.

The instruction therefore regulates the exercise of powers by central GST formations during the interim period; it does not itself amend the CGST Act.

No Further GST Arrests By CGST Field Formations

The instruction records the Council’s recommendation to withdraw arrest powers under GST through omission of Section 69 of the CGST Act.

In line with that recommendation, all CGST field formations have been directed that no further arrests may be carried out under GST.

The direction provides administrative relief without waiting for the proposed legislative amendment. However, the instruction does not prescribe release or bail arrangements for persons already arrested, or direct closure of existing investigations and proceedings.

Interception Requires Specific Intelligence And Senior Approval

CBIC has prescribed safeguards governing interception of conveyances carrying goods.

A conveyance should be intercepted only on the basis of specific intelligence, duly authorised by an officer not below the rank of Joint Commissioner.

The authorising officer must record written reasons to believe that the goods are being transported in contravention of the CGST Act or its rules.

The requirement limits interception based on general or random checking and introduces senior-level authorisation supported by recorded reasons.

Inspection And Detention Linked To Supplier Or Recipient’s Location

Following interception, the proper officer may inspect the conveyance and goods only if either the supplier or recipient is registered within the State or Union Territory of the officer’s jurisdiction.

For an unregistered supplier or recipient, their location within the relevant State or Union Territory determines the territorial connection.

Where inspection establishes that goods being transported, or stored while in transit, contravene the CGST Act or its rules, the officer may detain or seize them in accordance with Section 129.

The instruction thus links ordinary inspection and detention action to the presence of at least one party to the transaction within the relevant State or Union Territory.

Transit-State Officers Must Allow Goods To Proceed In Specified Cases

A separate procedure applies where document verification reveals that neither the supplier nor recipient is registered or located within the State or Union Territory of the authorising officer’s jurisdiction.

Even where the intercepting officer forms a prima facie opinion that the goods are being transported in contravention of the CGST Act, the conveyance and goods must be allowed to proceed unhindered.

The officer must transmit the information to the proper officer having jurisdiction over the supplier or recipient. The receiving authority must examine the information and take necessary action.

For transporters moving goods across several States, this limits intervention by central GST officers in a transit State where neither party is registered or located, subject to the exception specified in the instruction.

Exception Where E-Way Bill And Supporting Documents Are Both Missing

The instruction permits inspection, detention or seizure irrespective of the supplier’s or recipient’s jurisdiction where no e-way bill has been generated and no document showing the origin or destination of the goods is produced.

The wording requires attention: the exception concerns the combined absence of an e-way bill and documents showing origin or destination. It should not be understood as applying merely because one of those requirements is missing.

CBIC has further directed that goods and conveyances in transit must not be detained or seized for reasons other than those specified in the instruction.

Confiscation Under Section 130 Barred For Goods In Transit

The Board has expressly directed that goods or conveyances in transit shall not be confiscated under Section 130 of the CGST Act.

This restriction operates alongside the limited detention and seizure permitted under the instruction. Detention or seizure under Section 129 may therefore take place where the prescribed conditions are satisfied, while confiscation of goods or conveyances in transit under Section 130 is prohibited.

The direction must be understood within its stated scope concerning goods and conveyances in transit.

No Show Cause Notices For Amounts Below ₹10,000

To reduce low-value litigation and compliance costs, CBIC has directed officers not to issue show cause notices where the amount involved is below ₹10,000.

The direction follows the Council’s recommendation to introduce a minimum threshold under Sections 73, 74 and 74A of the CGST Act.

The threshold takes into account the combined amounts under the CGST, SGST, IGST and UTGST enactments, together with compensation cess, as applicable. It is therefore an aggregate threshold, rather than a separate ₹10,000 limit for each tax component.

Since the instruction uses the expression “below ₹10,000”, an amount of exactly ₹10,000 does not fall within the stated restriction.

The instruction does not expressly order withdrawal of notices already issued, cancellation of existing demand orders or a general waiver of tax liability.

State GST Authorities Invited To Issue Similar Directions

The instruction is addressed to senior officers of Central Tax formations and directorates.

A copy has also been forwarded to the Additional Secretary of the GST Council Secretariat for circulation to State GST formations. State authorities may, if considered appropriate, issue similar instructions within their jurisdictions to ensure uniformity and effective implementation.

Accordingly, these directions should not be described as automatically binding every State GST formation. Their application within a particular State administration would depend on the instructions issued by that State.

Senior Officers To Monitor Implementation

Principal Chief Commissioners and Chief Commissioners have been requested to monitor implementation. Any difficulties are to be brought to the Board’s notice.

For taxpayers and transporters, the instruction introduces significant interim safeguards concerning arrests, movement of goods and small-value notices, while legislative amendments remain pending.

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