GST enforcement relief that the GST Council approved on 8 October began to be applied on Sunday, 1 November, through instructions to tax officers rather than an amended law1. BusinessLine reported that the Central Board of Indirect Taxes and Customs (CBIC) has told field formations to apply the reforms as an interim trade-facilitation measure until Parliament amends the CGST Act1. Industry chamber CII, in a statement on 1 November, called the Council's decisions a landmark institutional reform1.
Tax rates have not changed. What has changed is the room an officer has to escalate a small mismatch into a criminal case, and how much evidence must sit behind a notice1, 2.
What applies from today
CBIC issued eight circulars on 26 October covering registration, notices and adjudication, BusinessLine reported5. From today, officers are told not to issue a show cause notice (SCN) where tax dues are below Rs 10,0001, 6.
CBIC has also told officers that the fraud provisions in section 74(1) or section 74A(5)(ii) of the CGST Act cannot be used without specific evidence. Non-payment alone, or a discrepancy found in scrutiny, is not enough, and the notice must set out the evidence2.
According to Manoj Mishra of Grant Thornton Bharat, the circular on proceedings directs evidence-backed notices, year-wise details in multi-year notices, and separate grounds and amounts for fraudulent and non-fraudulent demands5. A separate circular sets deadlines for registration decisions, with deemed approval if an officer does not decide in time5.
On e-way bills, the Council recommended rationalising interception and verification1. The reports reviewed do not give the operational detail, such as which discrepancies justify stopping a vehicle. Drivers should assume checks continue and that documents decide the outcome.
What still needs Parliament
- removal of arrest powers;
- a prosecution threshold of Rs 5 crore instead of Rs 1 crore;
- narrower offences under section 132 of the CGST Act;
- softer imprisonment rules, with more judicial discretion on sentencing.
BusinessLine reported that the law changes will be effective from 1 April 20272. Arrest and prosecution powers therefore stay in the Act, even as officers are told not to use them in the cases the Council named1, 2.
A taxpayer whose notice ignores the Rs 10,000 floor, or alleges fraud without evidence, can cite the circulars in reply2, 5. The Council includes state finance ministers2. The reports reviewed do not say whether state GST laws will be amended on the same timetable.
Measure, status and what it means
| Measure | Status | What it means for buyers |
|---|---|---|
| No SCN below Rs 10,000 of dues | Applied by CBIC instruction, not the Act1, 6 | Small mismatches should not draw notices |
| Fraud findings need specific evidence | CBIC circular on section 74(1) and 74A(5)(ii)2 | Standard, copy-paste fraud wording can be challenged |
| Arrest powers, Rs 5 crore threshold, section 132 | Needs Parliament; reported 1 April 20271, 2 | Arrest and prosecution powers stay in the Act |
| E-way bill interception and verification | Council recommendation; detail unconfirmed1 | Keep documents for every consignment |
Checklist for purchasing and finance
Keep a file for each inbound consignment: tax invoice showing GSTIN and HSN code, e-way bill, vehicle and transporter details, weighment slip and proof of delivery. The Council's package is meant to make enforcement more proportionate, so the file is the best defence1.
Re-verify a supplier's GSTIN before onboarding, then on a fixed cycle. Registrations taken under rule 14B are to show a marketplace warehouse as the principal place of business, so confirm the registration covers what you buy3.
If the tax demanded in a notice is below Rs 10,000, or the notice alleges fraud without material evidence, reply in writing within the deadline. Cite the circulars and ask for the evidence relied on2, 5.
Keep a GST warranty and indemnity in supplier contracts. The supplier confirms it is registered and filing, and covers demands, interest, penalties and credit reversals from its defaults. Arrest and prosecution powers stay in the Act until it is amended, so personal exposure remains2.
E-commerce: registration due to start, delivery levy pending
The simplified route under rule 14B is due to start on 1 November3, 6. It is open to small sellers of goods who supply only through e-commerce operators. They must pass on input tax credit of not more than Rs 2.5 lakh a month, and already have a physical presence and GST registration in at least one state3. The operator's consent comes through the system, and the new registration works only for platform supplies3. BusinessLine said it could help around 9.5 lakh small sellers6.
The Council also recommended 5% GST without input tax credit on delivery services arranged through e-commerce operators4. Companies still await the final notification4. A notification issued by the Council on 27 October set 1 November for implementation, and Nasscom asked the Finance Ministry on 28 October for a deferment to 1 January 20274. No notification giving effect to the 5% rate was confirmed in the reports reviewed.
A committee examining section 16(2)(c) of the CGST Act, which ties a buyer's credit to the supplier's tax payment, should report within three months. Any change is targeted for 1 April 20273.
What to watch
The CGST amendment bill, the delivery services notification, and whether field practice matches the circulars.