GST WEEKLY UPDATE :18/2026-27 (02.08.2026)

Reading Time: 9 minutes

-By CA Vipul Khandhar,

1. GSTN Puts Proposed e-Way Bill Enhancements on Hold: Relief and Strategy for Businesses:

In a significant update for trade and tax practitioners, the Goods and Services Tax Network (GSTN) issued an advisory on July 29, 2026, announcing that the proposed enhancements to the e-Way Bill system—originally slated for implementation on August 1, 2026—have been kept on hold until further notice.

Consequently, GSTN has instructed stakeholders to suspend any changes to their IT and ERP systems and announced the withdrawal of all related advisories and Frequently Asked Questions (FAQs) from the official GST Portal.

Timeline of Events

To understand the context of this pause, here is a brief timeline of the communications issued by GSTN regarding the proposed enhancements:

Date	Document / Action	Key Details
June 9, 2026	Initial Advisory	Introduced initial proposed technical & process enhancements to the e-Way Bill framework.
June 17, 2026	Follow-up Advisory	Provided technical clarifications and detailed integration parameters for IT vendors and taxpayers.
July 2, 2026	Detailed FAQs	Clarified practical edge cases and operational workflows.
July 29, 2026	Current Advisory	Put all proposed enhancements on hold indefinitely and withdrew prior advisories/FAQs.

Key Highlights of the July 29 Advisory

Official Stance:

“Implementation of the above-mentioned enhancements has been kept on hold until further notice… no changes are required to be implemented in the production environment… All related advisories, along with the FAQs issued, shall also be withdrawn from the GST Portal.”

 Core Takeaways:

1. No Production Environment Changes: Taxpayers, solution providers, and Application Service Providers (ASPs/GSPs) are not required to push any software updates, API modifications, or process changes to their production systems for August 1, 2026.
2. Withdrawal of Guidance: The FAQs issued on July 2, 2026, and the advisories from June 2026 are being removed from the portal, signaling that the proposed framework may undergo further revisions before a re-introduction.
3. Status Quo Maintained: The existing e-Way Bill generation and management rules remain in force without modification.

Practical Implications for Businesses & Tax Practitioners

1. Relief from Immediate IT Deadlines

Many enterprise taxpayers and logistics providers were racing against the clock to adjust their Enterprise Resource Planning (ERP) systems (such as SAP, Oracle, or Tally) to comply with the August 1 deadline. This pause provides much-needed breathing room for IT and tax teams.

2. Version Control & Staging Systems

• Freeze Production Pushes: Immediate communication should be sent to internal IT and ERP vendors to freeze any scheduled production deployments related to the enhancements.
• Archive Staging Work: If your team has already developed or tested code in sandbox environments based on the June/July advisories, archive the codebase rather than deleting it. It is likely that these enhancements will be reintroduced in a refined format.

3. Supply Chain Stability

Given that logistics networks rely heavily on smooth e-Way Bill generation, rolling out major system changes without adequate testing can lead to transit delays and vehicle detentions. Holding the release ensures supply chains remain uninterrupted during peak operational periods.

2. Digital Transformation in Express Cargo: CBIC Automates Courier Import Refund Processing via ECCS: CBIC Circular No. 34/2026-Customs dated July 30, 2026:

The Central Board of Indirect Taxes and Customs (CBIC) issued Circular No. 34/2026-Customs on July 30, 2026, introducing an automated refund mechanism for courier imports. By launching a dedicated ECCS Refund Module on the Express Cargo Clearance System (ECCS portal), the Board has transitioned Section 27 refund claims for Courier Bills of Entry from manual processing to an end-to-end digital portal.

This reform modifies earlier foundational circulars—Circular No. 24/2007-Cus. and Circular No. 22/2008-Customs—and outlines operational workflows, transitional arrangements, and post-audit mechanisms.

Key Features of the ECCS Refund Module

Feature	Key Provision / Mandate	Impact on Stakeholders
Electronic Filing	Submissions via ECCS portal with scanned uploads (Bill of Entry, Airway Bill, Proof of Duty Payment, Invoices, Unjust Enrichment Certificate, NOC).	Eliminates physical document submission at Express Cargo Terminals.
Unique Tracking (RRN)	Instant generation of a Refund Request Number (RRN) upon filing.	Enables real-time status monitoring via the ECCS dashboard.
Time-Bound Scrutiny	Deficiencies must be communicated within 10 days of RRN generation. Single-instance query mandate.	Prevents piecemeal queries and reduces processing turnaround times.
Electronic Orders	Deficiency Memos, Show Cause Notices (SCNs), and final Speaking Orders issued online.	Complete electronic audit trail and enhanced administrative accountability.
Audit Paradigm Shift	Discontinuation of concurrent audit in favor of risk-based post-audit.	Faster initial sanction and disbursement of refund claims.

  Technical & Operational Workflow Analysis

[Authorised Courier Files Application on ECCS]

                     │

                     ▼

  [System Generates Unique Refund Request Number (RRN)]

                     │

                     ▼

  [Scrutiny by Proper Officer (Max 10 Days)]

       ├── Deficiencies Found? ──> [Single-Instance Query Issued via Dashboard]

       │                                            │

       ▼ (No Deficiencies / Rectified)             ▼ (Rectified)

  [Acknowledgement Number Issued Electronically]

                     │

                     ▼

  [Speaking Order Sanctioning Refund Issued Online]

                     │

                     ▼

  [Disbursement via Existing Manual Payment Process]

Critical Practical Considerations for Trade

1. Hybrid Payment Disbursement Mechanism

While filing, tracking, and adjudication are fully digitized, payment integration between ECCS, ICEGATE, and the Public Financial Management System (PFMS) has not yet been operationalized. Consequently, once a refund is sanctioned electronically, actual disbursement will continue through traditional manual payment channels. Authorised Couriers must ensure accurate bank account details are provided at the time of online application.

2. Elimination of Piecemeal Queries

The directive requiring officers to raise all deficiencies at once within 10 days of RRN issuance addresses a long-standing trade grievance. If queries are raised incrementally, trade bodies can cite Circular No. 34/2026-Customs during administrative escalations.

3. Transition to Post-Audit

Replacing concurrent audit with a post-audit mechanism shifts the verification focus after sanction. The risk parameters for post-audit selection will be designed by the Directorate General of Audit alongside DGARM. Importers and couriers must maintain robust secondary documentation, as post-sanction scrutiny will rely heavily on data analytics.

Transition Timeline & Implementation Strategy

  July 30, 2026                                September 30, 2026

┌───────┴───────────────────────────────────────────────┴────────────────────────>

│                  TRANSITION PERIOD                    │ MANDATORY ECCS FILING  │

│  Dual filing permitted: Manual or ECCS Refund Module  │ Manual filing barred   │

│                                                       │ (exceptions apply)     │

└───────────────────────────────────────────────────────┴────────────────────────┘

• Transitional Window: Stakeholders can file refund applications either manually or via the ECCS Refund Module up to September 30, 2026.
• Mandatory Digital Filing: Effective October 1, 2026, manual applications will no longer be accepted unless prior written permission is granted by the concerned Principal Commissioner / Commissioner of Customs.

Strategic Action Items for Practitioners & Couriers

1. SOP Update & Authorization: Authorised Couriers must update internal standard operating procedures (SOPs) to ensure importer documents (specifically Unjust Enrichment Certificates and NOCs) are collected in digital format prior to portal submission.
2. Dashboard Monitoring: Establish routine dashboard audits for active RRNs to track the 10-day scrutiny window and respond swiftly to electronic deficiency memos.

Internal ERP Integration: Keep an eye on upcoming operational guidelines from the Directorate General of Systems. System integration adjustments may be necessary once PFMS/ICEGATE payment gateway linkages are fully enabled.

3. GST Framework on Assistive Devices for Persons with Disabilities: Rajya Sabha Update: Unstarred Question No. 1029(July 28, 2026):

Key Takeaways & Regulatory Highlights

• Stakeholder Representations Acknowledged:

The Union Government confirmed receipt of representations from disability rights organizations and various stakeholders requesting a complete GST exemption on assistive devices and technologies used by Persons with Disabilities (PwDs).

• Role of the GST Council:

The Minister emphasized that GST rates and exemptions are determined solely based on the recommendations of the GST Council—a constitutional body representing both the Central and State/UT Governments.

• Key Decision at the 56th GST Council Meeting:

Following rate rationalization recommendations made during the 56th GST Council meeting (held on September 3, 2025):

• The GST rate on prosthetic and orthopaedic appliances, artificial body parts, and other appliances under Heading 9021 was reduced from 12% to 5%.
• The concessional rate of 5% for specified assistive devices was formally retained.

Current Applicable Tax Structure

1. Complete GST Exemption (0%)

• Hearing Aids: Hearing aids and parts used in their manufacture remain fully exempt from GST under Notification No. 10/2025-Central Tax (Rate), dated September 17, 2025.

2. Concessional GST Rate (5%)

Under Schedule I to Notification No. 09/2025-Central Tax (Rate), dated September 17, 2025, a 5% concessional GST rate applies to a broad range of assistive technologies and medical appliances:

Category	Covered Items / Equipment
Orthopaedic & Mobility Aids	Crutches, surgical belts, trusses, splints, fracture appliances, wheelchairs (Heading 87.13), and retrofitment kits for vehicles used by PwDs.
Prosthetics & Implants	Artificial body parts, intraocular lenses, cochlear implants, artificial electronic larynxes (and spare parts), external catheters, urine collection bags, joint-replacement/spinal implants, and bone cement.
Visual Impairment & Braille Aids	Braille writers, slates, frames, styli, erasers, calculators, embossed paper, computer terminals/displays, Braille typewriters, white canes, tactile displays, electronic obstacle-detection devices, and adapted clocks/watches.
Educational & Vocational Aids	Talking books, large-print books, talking calculators/thermometers, equipment for computerized Braille production, assistive listening devices, and audiometers.
Specialized Medical Care	Special jelly cushions (to prevent bed sores), stair lifts, and vocational/training instruments specifically adapted for PwD education and rehabilitation.

Conclusion

The current tax framework seeks to balance revenue considerations with social accessibility by maintaining either a Nil rate (for hearing aids) or a concessional 5% rate (for mobility, visual, and orthopedic aids) to keep essential disability assistive technologies affordable.

4.    SEZ Export Container Sealing via RFID E-seal only: Instruction No. 124:

The Department of Commerce, Ministry of Commerce and Industry has issued Instruction No. 124 (F. No. K-43022/182/2025-SEZ-Part(1)) dated July 22, 2026.

The Instruction establishes a standardized, uniform sealing protocol for SEZ export container consignments across all Indian gateway ports. Addressed to all Zonal Development Commissioners and Development Commissioners, this regulatory directive aims to streamline port movement by addressing local variations in container clearance procedures.

Key Highlights & Core Directives

1. Mandatory Adoption of RFID E-Seals

Under Instruction No. 124, all export containers originating from SEZ units that carry a valid Let Export Order (LEO) must strictly adhere to the use of Radio Frequency Identification (RFID) seals.

• The sealing protocol must comply with CBIC Circular No. 41/2017-Cus. (dated October 30, 2017).
• This reinforces the risk-based, self-sealing electronic framework previously enabled under CBIC Circulars 26/2017-Cus., 36/2017-Cus., and 37/2017-Cus.

2. Prohibition of Additional Port-Level Requirements

To address the friction caused by divergent practices at individual maritime ports, the Department has mandated that gateway ports shall not demand any additional sealing requirements once a container is sealed with a compliant RFID tag under a valid LEO.

3. Clarification on Liner Seals

The Department explicitly clarified that liner seals—typically attached by shipping lines—do not serve as a substitute for Customs-prescribed electronic sealing mechanisms unless specifically recognized under statutory Customs procedures. Exporters cannot replace mandatory RFID seals with liner seals.

Comparative Overview: Old vs. New Framework

Parameter	Previous Operational Practice	Post-Instruction No. 124 Mandate
Sealing Consistency	Divergent, local port-specific practices causing delays	Uniform national standard across all gateway ports
Primary Mechanism	Ambiguous reliance between RFID, physical, and liner seals	Exclusively CBIC-compliant RFID e-seals
Port Inspection Level	Subject to extra gateway-level sealing demands	Zero additional sealing requirements at ports
LEO Acceptance	Subject to secondary checks at local port discretion	Immediate gateway acceptance upon valid LEO & RFID tag

Expected Impact on India’s Export Ecosystem

• Elimination of Procedural Ambiguity: Standardizes container handling rules nationwide, giving SEZ units predictable timelines.
• Reduction of Transit Bottlenecks: Prevents unnecessary holdings or re-sealing at gateway ports, reducing demurrage and storage costs.

 

5. 
   

   SC Upholds Constitutional Validity of Section 16(2)(c):

Apex Court affirmed the judgment of the Gujarat High Court (in Maruti Enterprise v. Union of India), holding that Section 16(2)(c) of the CGST Act, 2017 is constitutionally valid and does not require to be “read down” to protect bona fide purchasing dealers. In the case of M/s. Bhandari Scrap Traders v. Union of India & Ors. [SLP (C) No. 23931/2026; Order dated July 24, 2026]

The ruling confirms that the actual remittance of tax to the Government by the supplier is a mandatory, non-negotiable statutory condition precedent for claiming ITC.

Key Judicial Findings & Principles

  [Fulfillment of Clauses (a), (aa), (b), (ba)]

• Tax Invoice Received
• Goods / Services Received ──>  NOT ENOUGH ALONE
• Payment Made via Banking Channels

                     │

                     ▼

  [Clause (c): Actual Payment of Tax by Supplier] ──> MANDATORY PRE-CONDITION

                     │

                     ▼

  [ITC Eligible / Maintained]  OR  [Fails Payment ──> Temporary Reversal Required]

1. ITC is a Statutory Concession, Not an Absolute Right

The Supreme Court reiterated established fiscal jurisprudence that Input Tax Credit is a creation of statute—a conditional concession granted by law—and not a vested or fundamental right. Consequently, taxpayers claiming ITC must strictly fulfill all conditions specified under Section 16(2), including clause (c).

2. Failure of Parity with Delhi VAT (DVAT) Regime

The Court endorsed the Gujarat High Court’s detailed distinction between the GST framework and former state VAT statutes (such as the Delhi VAT Act interpreted in On Quest Merchandising / Arise India):

• DVAT Scheme: Under DVAT, provisions were read down to safeguard purchasing dealers who acted in good faith.
• GST Scheme: The CGST Act contains distinct provisions (including Sections 41, 73, and 74 read with Rule 37A) that form a self-contained statutory mechanism specifically handling instances of supplier default.

3. Deferral of Credit vs. Absolute Forfeiture

The Supreme Court noted that Section 16(2)(c), when read alongside Section 41(2) and Rule 37A, does not result in permanent forfeiture of credit. If a recipient reverses ITC due to a supplier’s failure to deposit tax, the recipient is legally entitled to re-avail the credit once the defaulting supplier subsequently discharges the tax liability.

4. Overriding Non-Uniform High Court Precedents

While High Courts in Assam (Gauhati) and Tripura (Sahil Enterprises) had previously taken purchaser-friendly stances, the Supreme Court noted that those decisions lacked the exhaustive analysis of the GST statutory architecture undertaken by the Gujarat High Court. The dismissal of this SLP sets a binding national precedent reinforcing strict compliance.

Impact Matrix for Tax Professionals & Businesses

Area	Impact & Operational Realities
Bona Fide Defense	Inapplicable: A buyer’s “good faith” or possession of a valid tax invoice/proof of payment through banking channels is no longer a valid legal defense against an ITC reversal notice under Section 16(2)(c).
Supply Chain Due Diligence	Heightened Risk: Businesses must perform rigorous vendor risk profiling before onboarding and continuously monitor suppliers’ monthly GSTR-3B compliance.
Commercial Contracts	Clause Adjustments: Purchase agreements must incorporate indemnity and credit-hold clauses, allowing buyers to hold back payments or indemnity amounts until the supplier’s GSTR-3B is verified.
Reconciliation Protocols	GSTR-2B & Ledger Tracking: Automated monthly reconciliation between GSTR-2B, GSTR-3B statuses of suppliers, and internal purchase registers becomes essential to manage potential reversals under Rule 37A.

Conclusion

The Supreme Court’s ruling in Bhandari Scrap Traders brings finality to a contested issue under GST laws.

Disclaimer:

This publication contains information for general guidance only. It is not intended to address the circumstances of any particular individual or entity. Although the best of endeavour has been made to provide the provisions in a simpler and accurate form, there is no substitute to detailed research with regard to the specific situation of a particular individual or entity. We do not accept any responsibility for loss incurred by any person for acting or refraining to act as a result of any matter in this publication.