Section 67 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
A person walks into a shop, buys something, and leaves. Later they return the item, the money comes back, and the invoice is cancelled. That transaction was a statutory power being exercised.
Section 67(12): the Commissioner or an officer authorised by him may cause purchase of any goods or services or both by any person authorised by him from the business premises of any taxable person, to check the issue of tax invoices or bills of supply by such taxable person; and on return of goods so purchased by such officer, the taxable person or any person in charge of the business premises shall refund the amount so paid towards the goods, after cancelling any tax invoice or bill of supply issued earlier.
What the power is for
The purpose is stated in the sub-section itself and is exhaustively narrow: to check the issue of tax invoices or bills of supply.
That is one question — was a document issued? — and it is directed at businesses supplying to walk-in, unregistered customers, where the natural check of a recipient claiming credit does not operate.
It is not a power to:
- check the rate applied, or the classification;
- check the value at which the supply was made;
- check stock, or reconcile inventory;
- gather evidence of unrecorded turnover generally;
- inspect or search the premises.
The sub-section confers a purchase power for a stated verification purpose. What is observed incidentally may prompt other action, but that other action must find its own provision — an inspection under s.67(1), a scrutiny under s.61, an audit under s.65.
The mechanics
Who authorises. The Commissioner or an officer authorised by him.
Who buys. "Any person authorised by him" — so not necessarily an officer. The purchaser may be a private person acting under authorisation, which is what makes the exercise workable.
Where. The business premises of any taxable person.
What is bought. Goods or services or both.
What happens afterwards. On return of the goods so purchased by such officer, the taxable person or the person in charge of the premises shall refund the amount paid, after cancelling any tax invoice or bill of supply issued earlier.
So the transaction is designed to reverse itself. The supply is undone, the consideration returns, and the document is cancelled.
The consequences of the reversal
No liability arises on the test purchase itself. Once the goods are returned, the payment refunded and the document cancelled, there is no supply left to tax. Reporting a test purchase as a taxable outward supply and paying tax on it is unnecessary.
Cancellation must be recorded. The invoice or bill of supply cancelled should be marked cancelled in the books and in the invoice series, with the reference to the return. A cancelled document in a numbered series must not simply disappear — Rule 46 requires a consecutive serial number, and gaps invite questions. Invoice numbering →
Where the document was already reported. If the invoice was included in a GSTR-1 filed before the return happened, the cancellation should be reflected — through an amendment, GSTR-1A, or a credit note as appropriate to the timing. GSTR-1A →
The refund obligation is on the supplier. The words are "shall refund". It is not a matter of negotiation, and delay in refunding is itself unhelpful.
Test purchase and sampling are different things
A related but distinct exercise is sampling — drawing a sample of goods to determine what they are, for classification or rate purposes.
The two differ in every respect:
| Test purchase — s.67(12) | Sampling | |
|---|---|---|
| Purpose | Whether an invoice or bill of supply was issued | What the goods are — composition, classification |
| Statutory basis | Express, in s.67(12) | Not a standalone power in s.67; arises within an inspection or search |
| Consideration | Paid, then refunded | Not a purchase |
| Goods | Returned | Consumed in testing, or returned |
| Document | Issued, then cancelled | None |
| What it proves | Invoicing compliance | Nature of the goods |
Where an officer proposes to draw a sample, the questions to ask are the same as for any other action: under which provision, and on what authorisation. And the practical protections are the standard ones — a signed record of the sample drawn, its quantity and description, a counter-sample retained by the taxpayer, and a copy of the test report when it is received.
What a business should do
Before it happens — the compliance point. The power exists because some businesses do not issue documents to walk-in customers. The answer is systems, not vigilance: every sale generates a document, whether a tax invoice or a bill of supply, without exception and without a manual override.
When a return is presented:
- Ask for identification and the authorisation. The sub-section requires the purchase to be caused by the Commissioner or an officer authorised by him.
- Refund promptly — the obligation is statutory.
- Cancel the document and record the cancellation properly in the series and in the books.
- Note the episode — date, item, amount, document number, officer's details. If a proceeding follows, this is the contemporaneous record of what actually occurred.
- Check the reporting position if the document had already been reported in a return.
Key takeaways
- Section 67(12) authorises a purchase only to check whether a tax invoice or bill of supply is issued.
- The Commissioner or an authorised officer causes it; the buyer may be any person authorised.
- On return of the goods, the supplier shall refund the amount and cancel the document.
- The transaction reverses itself, so no tax liability survives it.
- The cancellation must be recorded in the invoice series and the books, and reflected in returns if already reported.
- Test purchase is not sampling; sampling addresses what the goods are and needs its own basis and record.
Read next
- Section 67(11): Spot Seizure of Documents Produced
- Section 67(1): Inspection and the Reasons-to-Believe Test
- Invoice Numbering: Series Rules and Common Errors
- Bill of Supply: Rule 49 Particulars and When Required
Disclaimer: Positions stated as on 5 September 2026, based on the CGST Act and Rules as amended to 31 March 2026 (ICAI Bare Law, 12th edition) and the ICAI Handbook on Inspection, Search, Seizure and Arrest under GST (July 2025).