Section 164 – Power of Government to Make Rules

Section 164 of the Central Goods and Services Tax Act, 2017 deals with the power of the Government to make rules for carrying out the provisions of the CGST Act. It is one of the important enabling provisions in the GST law because the Act lays down the primary legal framework, while many detailed procedures, forms, conditions, restrictions and compliance requirements are prescribed through the CGST Rules.

Under Section 164, the Government may, on the recommendations of the GST Council, make rules by notification for carrying out the provisions of the CGST Act. The section also allows rules to be made on matters that the Act specifically requires or permits to be prescribed. It further deals with the limited power to give retrospective effect to rules and permits rules to prescribe a penalty of up to ₹10,000 for contravention of those rules.

Section 164 is therefore the statutory foundation for the Central Goods and Services Tax Rules, 2017, as well as subsequent amendments to those Rules.

What Is Section 164 of the CGST Act?

Section 164 is titled “Power of Government to make rules.”

The current provision contains four sub-sections:

1. Section 164(1) – General power to make rules.
2. Section 164(2) – Power to make rules on matters required or permitted to be prescribed.
3. Section 164(3) – Power to give retrospective effect to rules, subject to a statutory limitation.
4. Section 164(4) – Power to prescribe a penalty for contravention of rules, subject to the statutory monetary ceiling.

The provision is part of Chapter XXI – Miscellaneous of the CGST Act.

Why Is Section 164 Important?

The CGST Act cannot practically contain every operational detail of the GST system.

The Act establishes the main legal framework, while detailed matters such as procedures, forms, methods, conditions and compliance mechanisms often need to be prescribed separately.

For example, GST law contains provisions relating to:

• registration;
• tax invoices;
• input tax credit;
• returns;
• refunds;
• assessment;
• appeals;
• e-way bills;
• electronic records;
• payment of tax;
• recovery;
• demands; and
• other compliance procedures.

Many of the detailed requirements under these provisions are implemented through the CGST Rules, 2017.

The GST Council’s records confirm that the CGST Rules were notified under the rule-making power contained in Section 164.

Section 164(1) – General Power to Make Rules

Section 164(1) provides that:

“The Government may, on the recommendations of the Council, by notification, make rules for carrying out the provisions of this Act.”

This is the basic rule-making authority under Section 164.

Three important elements can be identified:

• the Government has the power to make rules;
• the rules are made on the recommendations of the GST Council; and
• the rules are made by notification.

The purpose is to carry out the provisions of the CGST Act.

Role of the GST Council

Section 164(1) expressly refers to the recommendations of the Council.

The Council means the GST Council constituted under Article 279A of the Constitution of India.

The GST Council considers GST policy and legislative proposals, including proposals concerning rules and amendments to the GST framework.

After the necessary statutory process, the Central Government may issue the corresponding notification under the authority provided by Section 164.

The GST Council’s published records contain numerous examples of rules being proposed or amended under Section 164. For example, the original CGST Rules were notified under this rule-making power.

Rules Are Subordinate Legislation

The rules made under Section 164 are commonly understood as subordinate or delegated legislation.

The CGST Act is the principal legislation passed by Parliament.

The CGST Rules are made by the Government under authority delegated by the Act.

This means that the Rules operate within the authority granted by the CGST Act.

A rule is therefore not intended to independently replace the Act. It provides the detailed mechanism required to implement the statutory provisions.

This relationship is important when interpreting any GST compliance requirement.

Section 164(2) – Matters That May Be Prescribed

Section 164(2) expands on the general rule-making power.

It provides that, without prejudice to the generality of Section 164(1), the Government may make rules for:

• all or any matters which the CGST Act requires to be prescribed; or
• matters in respect of which provisions are to be or may be made by rules.

This provision gives the Government the ability to fill in the procedural and operational details that the Act deliberately leaves to subordinate legislation.

Meaning of “As May Be Prescribed”

The expression “as may be prescribed” appears in numerous provisions of the CGST Act.

Generally, when the Act states that something shall be done in the manner or subject to conditions “as may be prescribed,” the relevant details can be provided through rules made under the authority of Section 164.

For example, the Act may establish a right, obligation or procedure while leaving the detailed manner of implementation to the Rules.

Section 164 provides the general statutory authority for making those Rules.

Examples of Matters Prescribed Through CGST Rules

The CGST Rules contain detailed provisions dealing with many areas of GST administration.

Examples include:

• registration procedure;
• composition levy procedure;
• valuation;
• tax invoices;
• credit and debit notes;
• returns;
• payment;
• input tax credit procedures;
• refunds;
• assessment;
• appeals;
• e-way bills;
• audit-related procedures;
• demand and recovery procedures; and
• various GST forms.

The GST Council maintains a dedicated section for the CGST Rules, reflecting their role in implementing the CGST Act.

Section 164 and GST Forms

Many GST forms used by taxpayers and tax officers are prescribed through the CGST Rules.

For example, GST compliance uses forms relating to:

• registration;
• returns;
• refunds;
• demands;
• appeals;
• assessment;
• payment;
• recovery; and
• other proceedings.

The authority to prescribe detailed procedures through Rules is connected to the enabling framework created by Section 164.

Therefore, Section 164 indirectly supports a large part of the practical GST compliance system.

Section 164(3) – Retrospective Effect of Rules

Section 164(3) contains an important provision concerning retrospective effect.

It provides that the power to make rules under Section 164 includes the power to give retrospective effect to the rules or any of them.

However, there is an express limitation:

A rule cannot be given retrospective effect from a date earlier than the date on which the provisions of the CGST Act came into force.

This limitation is important because it prevents the rule-making power from being used to make a rule retrospectively effective from a date earlier than the commencement of the Act itself.

Example of Retrospective Rule-Making

Suppose a rule is amended in 2026 and the notification states that the amendment will operate retrospectively.

Section 164(3) permits retrospective rule-making, but the retrospective date cannot be earlier than the date on which the relevant provisions of the CGST Act came into force.

Therefore, Section 164(3) gives retrospective rule-making authority, but it is not unlimited retrospective power.

Why Is Retrospective Rule-Making Significant?

Retrospective amendments can affect:

• tax compliance;
• procedural requirements;
• documentation;
• eligibility conditions;
• calculation mechanisms; and
• other matters governed by the Rules.

A taxpayer therefore needs to carefully examine the effective date specified in a rule amendment.

The fact that a notification is issued on one date does not necessarily mean that every provision introduced through it applies only from that date.

Where retrospective operation is legally provided, the specified effective date must be considered.

Section 164(4) – Penalty for Contravention of Rules

Section 164(4) provides that rules made under Section 164(1) or Section 164(2) may provide that a contravention of those rules shall be liable to a penalty.

However, the section places a monetary ceiling on this delegated penalty power.

The penalty prescribed under such rules cannot exceed ₹10,000.

This is an important distinction.

Section 164 does not itself impose a ₹10,000 penalty for every breach of every GST Rule.

Instead, it authorises rules made under the section to provide for a penalty for contravention of those rules, subject to the maximum amount specified in Section 164(4).

Section 164 Does Not Create an Unlimited Penalty Power

The ₹10,000 ceiling under Section 164(4) is a statutory limitation on the specific rule-making power referred to in that sub-section.

It should not be interpreted to mean that every penalty under the CGST Act is capped at ₹10,000.

The CGST Act contains separate provisions dealing with penalties for different defaults and offences.

For example, the Act contains specific penalty provisions relating to:

• tax-related defaults;
• registration violations;
• invoice-related violations;
• fraudulent ITC;
• offences; and
• other contraventions.

Those provisions operate according to their own statutory framework.

Section 164(4) concerns the penalty that may be provided through rules for contravention of those rules.

Difference Between the CGST Act and CGST Rules

Understanding Section 164 becomes easier by distinguishing the Act from the Rules.

CGST Act	CGST Rules
Principal legislation	Subordinate legislation
Passed by Parliament	Made by Government under delegated authority
Contains the main statutory framework	Provides detailed implementation
Creates substantive statutory powers and obligations	Prescribes procedures, methods, conditions and other details where authorised
Section 164 provides rule-making authority	Rules are made under powers such as Section 164

The Rules must operate within the authority provided by the Act.

Section 164 and Section 165

Section 164 should be read together with Section 165.

Section 164

Power of Government to make rules

Section 165

Power to make regulations

Section 164 concerns rules made by the Government.

Section 165 concerns regulations made by the Board consistent with the Act and the Rules.

Therefore, the two provisions provide different forms of delegated rule-making or regulatory authority.

Section 164 and Section 166

Section 166 deals with the laying of rules, regulations and notifications before Parliament.

This creates an additional legislative oversight mechanism.

Section 164 provides the power to make rules.

Section 166 deals with what happens after rules, regulations and notifications are made and issued, including their placement before Parliament in accordance with the statutory procedure.

The provisions should therefore be read together when understanding the legislative framework for GST Rules.

Section 164 and Section 168

Section 168 deals with the power to issue instructions or directions.

This is different from the rule-making power under Section 164.

A simple distinction is:

• Section 164 → Rules
• Section 165 → Regulations
• Section 166 → Laying before Parliament
• Section 167 → Delegation of powers
• Section 168 → Instructions or directions

Each provision serves a different function within the GST administrative framework.

Section 164 and Section 168A

Section 168A gives the Government a specific power to extend certain time limits in special circumstances, subject to its statutory conditions.

This is different from Section 164.

Section 164 is primarily concerned with making rules.

Section 168A is concerned with extending specified time limits in circumstances covered by that provision.

Therefore, these powers should not be confused.

Section 164 and GST Rule Amendments

The CGST Rules have been amended many times since GST was introduced.

Rule amendments are generally implemented through notifications issued under the statutory rule-making authority.

For example, CBIC Notification No. 11/2025-Central Tax dated 27 March 2025 expressly states that the Central Government was exercising the powers conferred by Section 164 to further amend the CGST Rules, 2017.

This demonstrates how Section 164 continues to operate as the statutory foundation for amendments to the CGST Rules.

Section 164 and Rule 164

Section 164 should not be confused with Rule 164 of the CGST Rules.

These are two completely different provisions.

Section 164 of the CGST Act

It deals with the power of the Government to make rules.

👉 Read More → Section 166 – Laying of rules, regulations and notifications

Rule 164 of the CGST Rules

Rule 164 deals with the procedure and conditions for closure of proceedings under Section 128A relating to specified demands under Section 73.

The GST Council recommended the insertion of Rule 164 along with forms and procedures for implementing Section 128A.

This distinction is particularly important because both provisions carry the number 164 but belong to different pieces of GST legislation.

Section 164 and Section 128A

The operation of Section 164 can be seen in the implementation of newer GST provisions as well.

For example, after Section 128A was inserted into the CGST Act, the GST Council recommended the introduction of Rule 164 to prescribe the procedure and conditions for availing the benefit under Section 128A.

The subsequent rule amendment was notified under the authority of Section 164.

This demonstrates how the Act can establish the substantive framework while the Rules provide the detailed implementation mechanism.

Can Rules Override the CGST Act?

Rules made under Section 164 are intended to carry out the provisions of the CGST Act.

Therefore, the rule-making power cannot ordinarily be understood as a power to rewrite the Act or act contrary to its provisions.

The Rules derive their authority from the Act.

The relationship can be expressed simply as:

Act → Provides statutory authority

Rules → Provide detailed implementation within that authority

The GST Council has also published advance ruling material discussing the relationship between statutory provisions and rules and recognising Section 164 as the enabling provision for rules carrying out the CGST Act.

Example – Input Tax Credit

Suppose the CGST Act provides that input tax credit can be availed subject to conditions and restrictions as may be prescribed.

The detailed procedure or conditions may then be provided through the CGST Rules where the Act authorises such prescription.

Section 164 supplies the general rule-making authority through which those detailed provisions can be made.

Therefore, taxpayers dealing with input tax credit often need to read both:

• the relevant section of the CGST Act; and
• the corresponding CGST Rules.

Example – Registration

The Act establishes the statutory framework for GST registration.

The Rules then prescribe detailed matters such as:

• application procedure;
• documents;
• verification;
• authentication;
• registration certificate;
• amendments; and
• other procedural requirements.

These detailed rules operate within the rule-making framework provided by the Act, including Section 164 where applicable.

Example – GST Returns

The Act establishes the legal obligation to furnish returns.

The Rules can prescribe detailed matters such as:

• form and manner;
• filing procedure;
• electronic filing;
• particular details;
• timelines where authorised;
• corrections; and
• other procedural requirements.

Again, Section 164 provides the general enabling authority for making such rules.

Example – E-Way Bill

The CGST Act provides the statutory framework for documentation and verification of goods in movement.

Detailed e-way bill requirements are prescribed through the CGST Rules.

The GST Council records show that the CGST Rules have been used to implement operational mechanisms under the Act.

This is another practical example of the relationship between the Act and the Rules.

What Does “By Notification” Mean?

Section 164(1) specifies that rules are made by notification.

This means that the rule-making authority is exercised through an official notification rather than merely through an informal instruction or administrative communication.

Taxpayers should therefore check the relevant notification when determining:

• when a rule amendment takes effect;
• whether it applies prospectively or retrospectively;
• what exact language has been inserted or substituted; and
• whether transitional provisions apply.

Importance of Effective Dates

GST rule amendments may have different effective dates.

For example, a notification may be issued on one date but state that a particular amendment will come into force from another date.

A taxpayer should therefore distinguish between:

• date of notification;
• date of publication; and
• effective date of the amendment.

Where retrospective effect is specifically provided under the authority of Section 164(3), the stated retrospective date also needs to be considered.

Practical Compliance Approach for Taxpayers

Businesses should not rely only on the bare text of the CGST Act.

For areas where the Act uses expressions such as:

• “as may be prescribed”;
• “in such manner as may be prescribed”;
• “subject to such conditions as may be prescribed”; or
• similar delegated-legislation language,

the corresponding Rules should also be checked.

A practical GST compliance review should therefore involve:

1. Checking the relevant section of the CGST Act.
2. Identifying whether any matter is required to be prescribed.
3. Checking the corresponding CGST Rule.
4. Checking relevant notifications.
5. Checking amendments to the Rules.
6. Confirming the effective date.
7. Checking applicable circulars or instructions where relevant.
8. Applying the current version of the law.

Section 164 and Notifications

A notification and a rule are not necessarily the same thing.

Section 164 provides the Government with the authority to make rules by notification.

The notification is the instrument through which the rule or amendment may be brought into effect.

Therefore, when a GST rule is amended, taxpayers should examine the notification that introduced the amendment rather than relying only on a secondary summary.

Official CBIC notifications frequently expressly state that they are issued in exercise of the powers conferred by Section 164.

Section 164 and the GST Council

The GST Council has an important constitutional role in the GST framework.

Section 164 specifically requires the Government to act on the recommendations of the Council when making rules under Section 164(1).

The GST Council’s published records contain examples of proposals and recommendations relating to the CGST Rules, including the original implementation of the Rules and later amendments.

Important Limitations of Section 164

Section 164 is a broad enabling provision, but it contains important limitations.

1. Rules Must Carry Out the Act

The basic purpose is to carry out the provisions of the CGST Act.

2. Council Recommendation

Section 164(1) expressly refers to recommendations of the GST Council.

3. Retrospective Limitation

Retrospective rules cannot operate from a date earlier than the date on which the provisions of the CGST Act came into force.

4. Penalty Ceiling

A penalty prescribed under rules under Section 164(1) or 164(2) for contravention of those rules cannot exceed ₹10,000 under Section 164(4).

These limitations are part of the statutory framework and are important when understanding the scope of delegated rule-making.

Section 164 – Key Differences From Other Miscellaneous Provisions

Section	Subject
Section 163	Levy of fee
Section 164	Power of Government to make rules
Section 165	Power to make regulations
Section 166	Laying of rules, regulations and notifications
Section 167	Delegation of powers
Section 168	Power to issue instructions or directions
Section 168A	Power of Government to extend time limit in special circumstances
Section 169	Service of notice in certain circumstances
Section 170	Rounding off of tax, etc.

Section 164 therefore forms part of a wider set of miscellaneous provisions dealing with the administration and implementation of the CGST Act.

Section 164 – Act vs Rules: Simple Example

Suppose the CGST Act states that a particular procedure must be followed in the manner prescribed.

The Act establishes the legal obligation.

The Government can then make a corresponding rule under the authority of Section 164 specifying:

• the procedure;
• the form;
• the documents;
• the manner of submission; and
• other details permitted by the Act.

The taxpayer must then read the Act together with the applicable Rule.

This is why GST compliance often requires reference to both the CGST Act and the CGST Rules.

Common Mistakes About Section 164

Mistake 1: Thinking Section 164 Is a Tax Levy Provision

Section 164 does not itself levy GST.

It provides rule-making authority.

Mistake 2: Thinking Every Rule Can Override the Act

Rules are made under delegated authority and are intended to carry out the Act.

Mistake 3: Assuming Every Rule Is Prospective

Section 164(3) permits retrospective effect within the statutory limitation.

The effective date must therefore be checked for each amendment.

Mistake 4: Assuming Every GST Penalty Is Limited to ₹10,000

The ₹10,000 ceiling in Section 164(4) relates to a penalty that may be provided through rules for contravention of those rules.

It does not replace the separate penalty provisions contained in the CGST Act.

Mistake 5: Confusing Section 164 With Rule 164

Section 164 of the CGST Act concerns the Government’s rule-making power.

👉 Read More → Section 164 – Power of Government to make rules

Rule 164 of the CGST Rules concerns the procedure for closure of specified proceedings under Section 128A.

Key Takeaways of Section 164

Section 164 can be summarised through the following points:

1. Section 164 deals with the power of the Government to make rules under the CGST Act.
2. The Government may make rules by notification for carrying out the provisions of the Act.
3. Section 164(1) refers to making rules on the recommendations of the GST Council.
4. Section 164(2) covers matters that the Act requires or permits to be prescribed.
5. The CGST Rules, 2017 derive their statutory foundation from this rule-making framework.
6. Rules provide detailed procedures and mechanisms for implementing many provisions of the CGST Act.
7. Section 164(3) permits retrospective effect to rules, subject to the statutory limitation.
8. A rule cannot be given retrospective effect from a date earlier than the date on which the provisions of the CGST Act came into force.
9. Section 164(4) permits rules to prescribe a penalty for contravention of those rules.
10. The penalty under such rules cannot exceed ₹10,000.
11. This ₹10,000 ceiling does not mean that every penalty under the CGST Act is capped at ₹10,000.
12. Section 164 is different from Section 165, which deals with regulations.
13. Section 166 deals with laying rules, regulations and notifications before Parliament.
14. Section 168 deals with instructions or directions.
15. Section 164 should be read with the relevant provisions of the CGST Act and the corresponding CGST Rules.
16. Rule amendments should be checked along with their notifications and effective dates.
17. Section 164 is an enabling provision and does not itself levy GST or create every substantive tax liability.
18. Taxpayers should distinguish Section 164 of the CGST Act from Rule 164 of the CGST Rules.

Conclusion

Section 164 of the CGST Act provides the statutory foundation for the Government’s power to make rules for implementing the GST law. It allows the Government, on the recommendations of the GST Council, to make rules by notification for carrying out the provisions of the CGST Act.

The importance of Section 164 can be seen throughout GST compliance. The CGST Act establishes the principal statutory framework, while the CGST Rules provide many of the detailed procedures, conditions, forms and mechanisms required for practical implementation. The original CGST Rules were notified under the rule-making power provided by Section 164, and subsequent rule amendments continue to be made under this authority.

Section 164(3) also permits retrospective effect to rules, but only within the statutory boundary that the retrospective date cannot be earlier than the date on which the provisions of the CGST Act came into force. Section 164(4) separately permits rules to provide for a penalty for contravention of those rules, subject to a maximum of ₹10,000 under that specific rule-making power.

For taxpayers, the practical importance of Section 164 is that GST compliance cannot always be understood by reading the Act alone. Whenever a provision states that something is to be done “as may be prescribed” or leaves a matter to be prescribed through rules, the corresponding CGST Rules and relevant notifications should also be examined.

Section 164 should therefore be read together with Sections 163 to 168, particularly Section 165 on regulations, Section 166 on laying of rules and notifications before Parliament, Section 167 on delegation of powers and Section 168 on instructions or directions. Together, these provisions form an important part of the administrative and legislative framework supporting the operation of the CGST Act.

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