GST Updates
GST Arrests, E-Way Bill Checks and ₹10,000 Notices: CBIC Instruction 02/2026
What CBIC’s interim direction changes for Central GST arrests, goods in transit and small-value notices—with jurisdiction examples and a business checklist.
NRS Editorial Desk · Published 2026-10-30 · 14 min read
CBIC’s Instruction 02/2026-GST, dated 30 October 2026, directs Central GST field formations to stop further arrests under GST, restrict e-way bill interception and detention, and refrain from issuing covered show-cause notices where the combined amount is below ₹10,000. These are interim directions pending legislative amendments—not a repeal of the GST Act, a tax waiver or a ban on every vehicle check.
For a business owner, the immediate questions are practical: which authority is acting, where are the supplier and recipient registered or located, what documents accompany the goods, and what is the combined amount in the notice case? This guide explains the direction paragraph by paragraph, with worked threshold examples and a dispatch checklist for businesses across India, including Kerala.
What changed on 30 October 2026?
| Issue | Direction for covered Central GST formations | Important limit |
|---|---|---|
| Arrests — paragraph 3.1 | No further arrests under GST. | Section 69 is not deleted by this instruction; existing cases are not automatically closed. |
| E-way bill interception — paragraph 3.2 | Specific intelligence, senior authorisation, written reasons and jurisdiction-based procedures. | Document obligations continue; an express exception covers the combined absence of an e-way bill and origin/destination documents. |
| Transit confiscation — paragraph 3.2(vi) | No Section 130 confiscation of goods or conveyances in transit. | Detention or seizure in the circumstances specified by paragraph 3.2 remains distinct. |
| Small-value show-cause notices — paragraph 3.3 | Do not issue the covered notices where the aggregate amount is below ₹10,000. | Combine relevant tax heads; exactly ₹10,000 is not below the floor. |
The 8 October Council meeting recommended legislative reforms. Paragraph 3 of the new instruction brings these three subjects into an interim Central administrative framework while the statutory amendments are pending. Its duration is tied to those amendments coming into force; it is not simply a promise to consider changes next April.
GST arrest powers: what the interim direction does—and what it leaves open
Paragraph 3.1 records the Council’s recommendation to omit Section 69, then instructs all CGST field formations not to undertake further GST arrests. For a Central GST investigation, that operative direction is the key development. The instruction therefore gives businesses a current Central direction to consider while the statutory omission is pending.
The distinction still matters: the instruction does not amend the Act, release a person already in custody, set aside an earlier arrest, terminate an investigation or grant immunity under another law. It also does not implement the separate ₹5 crore prosecution-threshold recommendation. An existing investigation, summons, bail matter or prosecution needs a review of its own facts and procedural stage.
A business facing an ongoing Central GST matter should give its adviser the case reference, issuing formation, relevant notices and dates, and a copy of paragraph 3.1. Continue responding through the proper process. Do not infer that the absence of further arrests removes tax, interest, document-production or response obligations.
E-way bill verification: the six directions businesses should understand
1. Specific intelligence and Joint Commissioner-level authorisation
Under paragraph 3.2(i), interception should be based on specific intelligence. An officer not below Joint Commissioner rank must authorise it and record written reasons to believe that the movement breaches the CGST Act or rules. A general suspicion is not the procedure described in this paragraph. The instruction does not prescribe a new driver application or an automatic right to leave an ongoing interception without following lawful directions.
2. Inspection and detention depend on the supplier or recipient connection
Paragraph 3.2(ii) permits inspection of the vehicle and goods when either the supplier or recipient is registered in the State or Union Territory of the inspecting officer’s jurisdiction, or is located there if unregistered. If inspection reveals a contravention, detention or seizure can follow under Section 129. Being in the supplier’s or recipient’s State does not by itself establish a contravention; the intelligence, authorisation and findings still matter.
3. Where neither party is in the authorising officer’s State
Paragraph 3.2(iii) addresses interception followed by document verification where neither party is registered or located within the State or Union Territory of the authorising officer’s jurisdiction. If the intercepting officer forms a prima facie view that there is a contravention, the direction is to permit unhindered passage and transmit the information to the proper jurisdictional officer. That receiving authority must examine it and take necessary action. Passage does not mean the suspected issue is erased.
4. Both missing: no e-way bill and no origin/destination document
The wording in paragraph 3.2(iv) is precise. It covers a vehicle for which no e-way bill has been generated and no document showing the goods’ origin or destination is produced. In that combined situation, inspection, detention or seizure is permitted irrespective of supplier or recipient jurisdiction.
Both absences form the exception described here. An invoice on board does not remove an otherwise applicable e-way bill requirement. Assess any missing or defective record under the applicable rules and the full instruction.
5. Detention and seizure remain limited to the stated circumstances
Paragraph 3.2(v) restricts detention or seizure of goods and vehicles in transit to the reasons set out above. A case review should therefore identify the paragraph relied on, the parties’ locations or registrations and the recorded alleged contravention, instead of relying only on the fact that a truck was stopped.
6. Section 130 confiscation of goods or vehicles in transit
Paragraph 3.2(vi) directs that goods or conveyances in transit should not be confiscated under Section 130. Confiscation must not be confused with inspection, detention or seizure: the instruction separately preserves the latter actions in specified circumstances. This is a transit direction, not a statement that Section 130 has disappeared from the statute for every situation.
Three dispatch examples: endpoint State, transit State and missing records
| Illustrative facts | How the instruction should be read |
|---|---|
| A Manjeri supplier sends goods to a Chennai recipient. A covered Central officer intercepts in Kerala. | The supplier connection can satisfy the State condition in paragraph 3.2(ii). Inspection still needs the prescribed basis and authorisation; detention needs a contravention. |
| A Kozhikode supplier sends goods to a Pune recipient through Karnataka. The relevant parties are registered/located in Kerala and Maharashtra, not Karnataka, and movement documents are produced. | For the covered Karnataka Central interception, examine paragraph 3.2(iii): permit passage and refer suspected contravention information to the proper authority. Do not assume that passage ends a later jurisdictional inquiry. |
| Neither an e-way bill has been generated nor an origin/destination document is produced. | Paragraph 3.2(iv) permits inspection, detention or seizure irrespective of supplier/recipient jurisdiction. This is not protected simply because the vehicle is in a transit State. |
These are invented examples to explain the instruction. Real movements can involve multiple GSTINs, bill-to/ship-to arrangements, unregistered parties or different authorities. Identify the parties and documentation for the actual transaction before applying the jurisdiction test.
GST notices below ₹10,000: combine the amounts before applying the floor
Paragraph 3.3 deals with show-cause notices under Sections 73, 74 and 74A. Its below-₹10,000 instruction uses the sum of the relevant CGST, SGST or UTGST, IGST and compensation-cess amounts in the case. It is not a separate ₹10,000 allowance under each head, an invoice-value limit or an annual-turnover exemption.
| Illustrative amounts in the case | Combined amount | Below ₹10,000? |
|---|---|---|
| CGST ₹4,500 + SGST ₹4,500 | ₹9,000 | Yes, under the instruction’s monetary test. |
| CGST ₹6,000 + SGST ₹6,000 | ₹12,000 | No—even though each component is below ₹10,000. |
| IGST ₹9,000 + compensation cess ₹1,000 | ₹10,000 | No—exactly ₹10,000 is not below it. |
The table isolates the threshold arithmetic; it is not a finding that a real notice is valid or invalid. Check the provision, all relevant components, factual period, authority and stage. The instruction does not set out a taxpayer-elected method for splitting one case into smaller amounts, nor does it turn an existing liability into a tax-free allowance.
An old notice, order or appeal is not automatically cancelled
The Council’s earlier recommendation contemplated statutory treatment of certain pending notices and appeals. This instruction does not reproduce an automatic disposal mechanism for every pending proceeding. It directs covered officers not to issue below-threshold notices. Those are different questions.
If a notice is already on the portal, record the response date, download the complete notice and annexures, reconcile the amounts and obtain advice on raising the relevant paragraph in a reasoned representation. Preserve hearing and appeal deadlines. A screenshot of a headline is not an order withdrawing a notice, and the instruction does not provide a general tax waiver.
Does CBIC Instruction 02/2026 apply to Kerala State GST?
The addressees and directions concern CBIC/Central GST formations. The final copy paragraph asks the GST Council Secretariat to circulate the instruction to State GST formations, which may issue similar instructions within their jurisdictions. It should not be presented as evidence that every State has already adopted identical directions.
For a Calicut, Manjeri or Malappuram business, identify the authority handling the actual interception or notice. A Kerala address alone does not tell you whether the action is Central or State GST. Where State GST is acting, check its corresponding instruction and applicable procedure. Where a covered Central formation is acting, assess the CBIC instruction against the case facts.
A practical checklist for owners, dispatch teams and finance teams
- Before dispatch: check the actual supplier/recipient GSTINs or locations, invoice or other applicable movement document, e-way bill requirement, vehicle/transporter details and document consistency. Do not reduce document controls because interception procedures have changed.
- Give the driver a reachable dispatch/finance contact and an accessible movement-document set. A saved copy helps continuity, but does not replace a required valid document.
- If intercepted: record the place, time, authority and communication reference, cooperate with the process and promptly provide the available documents. Ask the adviser to identify the relevant instruction paragraph and any jurisdiction issue.
- If goods are detained: preserve the full written record, documents produced, allegations and deadlines. Review detention/seizure separately from confiscation; do not assume every stop is unlawful.
- For a small-value notice: total the relevant tax-head amounts in the case, identify Sections 73/74/74A where applicable, and distinguish a proposed notice from an issued notice, order or appeal.
- For management: keep this instruction with the case file and assign a response owner. Record any corresponding State direction separately rather than treating all authorities as interchangeable.
Paragraphs 4–5 ask senior Central formations to monitor implementation and refer difficulties to the Board. They do not prescribe a new taxpayer appeal or grievance portal; keep implementation concerns with the existing case record and response process.
GST assistance in Kozhikode, Manjeri and Malappuram district
A Kozhikode trader receiving stock from another State and a Manjeri manufacturer making outward dispatches should each keep a clear route-and-registration record. Connect the dispatch file with the finance team’s return and notice records, so the business can explain the transaction and identify the appropriate jurisdiction quickly. The Central direction does not create a separate Kerala tax exemption.
NRS and Associates can assist with GST notice review, reconciliation and compliance documentation through its Calicut/Kozhikode and Manjeri offices, including businesses across Malappuram district and elsewhere in India. For an initial enquiry, share the issue type, authority, notice/interception date and response deadline. Use an agreed secure process for detailed tax records; do not send passwords or OTPs.
Frequently asked questions
Can Central GST officers arrest taxpayers after Instruction 02/2026?
Paragraph 3.1 directs CGST field formations not to carry out further arrests under GST. This is an interim administrative direction dated 30 October 2026; it does not itself delete Section 69 or dispose of existing cases.
Does the instruction apply automatically to Kerala State GST officers?
The instruction directs CBIC field formations. Its final paragraph asks that it be circulated to State GST formations, which may issue similar instructions. For action by Kerala State GST, check the applicable State instruction and the authority handling the case.
Are e-way bills or all GST vehicle checks abolished?
No. The instruction changes interception, inspection, detention and confiscation procedures for the covered Central formations. Businesses must still meet applicable e-way bill and transport-document requirements.
Who must authorise interception under the new direction?
Paragraph 3.2(i) requires specific intelligence and authorisation by an officer of at least Joint Commissioner rank, with written reasons to believe that the movement contravenes the CGST Act or rules.
What happens when neither supplier nor recipient is in the transit State?
Under paragraph 3.2(iii), after document verification, the intercepting officer should allow passage and send suspected contravention information to the proper jurisdictional officer. Read this with the specific exception in paragraph 3.2(iv), not as unconditional immunity.
What is the missing-document exception?
Paragraph 3.2(iv) addresses the combined situation where no e-way bill has been generated and no document showing the goods’ origin or destination is produced. It permits inspection, detention or seizure irrespective of supplier or recipient jurisdiction. A single missing item should not be substituted for that combined wording.
Is the ₹10,000 GST notice threshold separate for CGST and SGST?
No. Paragraph 3.3 aggregates the relevant Central, State or UT, integrated tax and compensation-cess amounts in the case. It directs that show-cause notices under the covered Sections 73, 74 and 74A should not be issued below ₹10,000.
Is a case involving exactly ₹10,000 below the threshold?
No. The instruction says below ₹10,000. Exactly ₹10,000 is outside that below-threshold direction; this alone does not establish that a notice is otherwise valid.
Does this cancel an existing GST notice or waive tax below ₹10,000?
The instruction does not provide a blanket waiver or an automatic disposal mechanism for existing notices, appeals or orders. Preserve deadlines, check the stage and authority, and raise any applicable instruction through a reasoned response.
Must businesses wait until 1 April 2027 to use this instruction?
No. The 30 October 2026 direction provides interim implementation by CBIC field formations pending the relevant legislative changes. The referenced 1 April 2027 date is the Council’s recommended commencement for amendments, not a reason to postpone these interim directions.