Ninety-One Pages of Pure Mercy

By Vijay Kumar

THE Eight-Gun Salute from Kartavya Bhawan

In the golden, sepia-toned days of Central Excise, when life moved at the leisurely pace of an inland letter and a single tariff advice could comfortably sustain two generations of range superintendents, circulars were treated with quiet reverence. In our brave, faceless GST paradise, however, circulars do not trickle down -they arrive like a flash flood.

On 26 October 2026, the GST Policy Wing at Kartavya Bhawan fired an eight-gun administrative salute, issuing Circulars 257, 258, 259, 260, 261, 262, 263 to 264 in a single afternoon and producing ninety-one pages of clarifications, corrections and occasional confessions.

At first glance, it appears to be just another collection of clarifications. It is not. Read carefully, and a deeper theme emerges. The Board is no longer merely explaining the GST law to taxpayers. It is explaining judicial discipline to its own officers.

- Registration cannot be denied on suspicion.
- Fraud cannot be alleged mechanically.
- Pre-deposits cannot be retained indefinitely.
- Omitted rules cannot be resurrected through administrative enthusiasm.

The real story of this 91-page exercise lies in four circulars: 257, 258, 259 and 264.

Circular No. The Agony of Proving You Exist

Of the ninety-one pages, thirty-eight pages are devoted to GST registration alone. That tells its own story.

The Board begins with prose worthy of a civics textbook with touching sincerity:

"It is a bona fide expectation of every person, who applies for GST registration, that his registration application is quickly processed, and GST registration is granted to him without any delay or hassles."

Every aspiring entrepreneur who ever applied for registration and was asked to furnish the photographs of premises, landlord documents, electricity bills, bank statements, geo-tagged locations and perhaps a character certificate from the local tea vendor will wipe away a quiet tear reading that opening sentence.

Most importantly, the Board directs officers to stop indulging in presumptive investigations.

- An applicant residing in one State can run a business in another.
- A software professional may operate from a room in a residence.
- A GST officer is not expected to reject an application merely because a factory chimney is missing from the horizon.

The Board also expressly prohibits officers from examining electricity bills as though they were forensic reports. Whether the connection is domestic or commercial, whether the bill amount is high or low, and whether the premises "looks suitable" for business are no longer matters for subjective speculation. An electricity bill proves identity and address, not entrepreneurial legitimacy.

- Summoning Ancestors:

If your shop has functioned for fifty years from ancestral premises with no paperwork in your name, the Board offers Annexure-IV : a solemn affidavit on non-judicial stamp paper where you swear to a Magistrate or Notary that you are the lawful legal heir, accompanied by the ancestor's death certificate.

- The Stamp Paper Slip-Up:

The FAQ (Q.29) says: The applicant must upload an affidavit "on a stamp paper of minimum value" without defining exactly what that number is. The Format (Annexure-IV) states: "To be executed on a non-judicial stamp paper of minimum value Rs. 100..."

So, what is the "minimum value"? Is it a Rs. 10, Rs. 20, or Rs. 50 stamp paper? Or is it the arbitrary Rs. 100 minimum mandated on the Board's own form? It is a delightful "mistake" that perfectly highlights how the left hand (the person writing the FAQ) and the right hand (the person drafting the legal templates) don't always align on their definitions of "minimum"!

- Consensual Co-Working:

For premises owned by family, upload Annexure-VI. And by virtue of FAQ 37, if you jointly own property with your spouse, you do not need an NOC from the co-owner -a rare statutory acknowledgment of domestic peace! For co-working spaces, submit your membership agreement with the exact allocated desk/suite along with the landlord's registered lease.

- The Rule 14A Express:

Small taxpayers passing on less than Rs. 2.5 lakh of monthly ITC can avail automated registration within three working days.

Circular 257 restores a revolutionary principle. Verification is meant to verify. It is not meant to imagine possibilities and investigate them.

Circular No. : Teaching Adjudicators to Read Before They Reject

If Circular 257 teaches officers how to process applications, Circular 258 teaches them how to write orders.

- Ending the Mechanical 'Fraud' Chorus:
Citing the Supreme Court in G.R. Infra Projects Ltd. - and the Andhra Pradesh High Court in Sriba Nirman Company , the Board reminds officers that invoking the extended period under Section 74 or 74A(5)(ii) requires deliberate mens rea . Routine discrepancies detected in audit or scrutiny do not justify a charge of fraud. As the Apex Court observed, writing "fraud or concealment" proves the assessing officer himself was clueless about what he was alleging!
- Banning the Standard Rejection:
Adjudicators are expressly forbidden from using that classic departmental dodge: "The reply of the taxpayer has been considered and is found unacceptable." Every defence submission must be analysed with recorded reasons.
- The Saheli Leasing Discipline:
Incorporating the Supreme Court's timeless sermon from Saheli Leasing - , the Board emphasizes that an order must have flow, sustained chronology, and readable sequence so that the reader "does not feel like parting or leaving it in the midway." Adjudication is not meant to be an anthology of unread citations.
- No Artificial Intelligence Hallucinations:
In a delightfully modern caution, officers using AI tools are reminded that algorithms hallucinate. Independent human verification is mandatory; an adjudicator cannot blame a machine when his order is ripped apart in a writ petition!
- No Parallel Circus:
Respect Section 6 and Armour Security - 2025-TIOL-57-SC-GST. If the State officer has initiated proceedings on an issue, the Central officer cannot open a duplicate front on the same subject.

Circular No. : Paying to Appeal, and Fighting to Get It Back

Few matters expose administrative instinct more clearly than pre-deposits.

The law requires taxpayers to deposit money before pursuing an appeal. That part is generally implemented with remarkable efficiency. Recovery of the same money after the taxpayer succeeds has often proved considerably slower.

Circular 259 seeks to correct this imbalance.

- Disputed Territory:
The mandatory 10% pre-deposit applies strictly to the contested "tax in dispute." What the taxpayer admits must be paid in full.
- Pre-Deposits Cannot Be Held Hostage:
Field formations harbour an instinctive aversion to returning pre-deposits, often arguing: "We are contemplating an appeal before the Tribunal, so your money stays with us." The Board directs that upon an appellate order in the taxpayer's favour, the pre-deposit must be refunded immediately unless a stay is granted by a higher forum.
- Remand Orders:
When the Tribunal remands a matter, the taxpayer is entitled to a refund of his pre-deposit without waiting for the fresh round of adjudication.

Circular No. : The Last Rites of Rule 96(10)

And here comes the circular many exporters will love.

Circular 264 is not merely another clarification. It is the formal obituary of one of GST's most notorious litigation generators.

Rule 96(10), despite years of controversy, survived long enough to produce confusion, demands, refund disputes and judicial intervention. Even after its omission on 8 October 2024, proceedings continued on the theory that an omitted rule somehow retained a ghostly afterlife .

The Supreme Court's observations in the Goodluck India matter finally settled the issue. If a rule is omitted without a saving provision, pending proceedings cannot be kept alive merely through administrative determination .

The Board has now accepted the inevitable.

Pending demands under Rule 96(10) stand closed with the omission of Rule 96(10) treated as effective retrospectively from 23.10.2017 .

For countless exporters, this circular is less a clarification than a liberation.

Circulars 260 to 263: The Supporting Cast

Demo Cars Finally Leave the Pit Stop:

For years, automobile dealers found themselves in the curious position of purchasing vehicles solely to demonstrate them to prospective customers and then being told that the corresponding input tax credit might not be available. Circular 262 seeks to settle this controversy by clarifying the position regarding credit on demo vehicles used to promote sales.

The issue may concern cars, but the principle extends much further. The circular therefore provides welcome certainty in an area where the litigation frequently logged more mileage than the demo vehicles themselves.

The other circulars deal with Input Service Distributor mechanics, banking-sector credit apportionment and export realisations through Special Rupee Vostro Accounts. These clarifications will be valuable to the affected sectors.

The Parting Thought

These Circulars reveal an unmistakable pattern. The Board is attempting to curb four habits that have generated a disproportionate share of GST litigation: suspicion at the registration stage, mechanical adjudication, resistance to refunds and attachment to dead rules.

For years, Courts have patiently explained these principles.

Let us give credit where it is due:

the Board has listened to the Courts, reined in arbitrary habits, and buried some notorious ghosts. The real test is whether the next registration application, adjudication order, refund claim, and Rule 96(10) notice reflect those words-or merely add another annexure to the folklore?

Until next week

Comments/feedback welcome at vijaywrite@tiol.in or 9848111243 (WhatsApp)