Section 154 – Power to Take Samples

Section 154 of the Central Goods and Services Tax Act, 2017 deals with the power to take samples of goods from the possession of a taxable person.

The provision authorises the Commissioner or an officer authorised by the Commissioner to take samples of goods where the officer considers it necessary. At the same time, Section 154 requires the officer to provide a receipt for the samples taken.

The section is short, but it has practical importance during GST scrutiny, inspection, verification, investigation and other proceedings where examination of the physical characteristics or composition of goods may be relevant.

The current statutory wording of Section 154 provides that the Commissioner or an officer authorised by him may take samples of goods from the possession of any taxable person where he considers it necessary, and must provide a receipt for the samples so taken.

What Is Section 154 of the CGST Act?

Section 154 is titled “Power to take samples.”

The provision states:

“The Commissioner or an officer authorised by him may take samples of goods from the possession of any taxable person, where he considers it necessary, and provide a receipt for any samples so taken.”

Thus, Section 154 contains two important elements:

1. Power to take samples of goods, where considered necessary.
2. Requirement to provide a receipt for the samples taken.

It is therefore a specific statutory power concerning physical goods and their examination.

Who Can Take Samples Under Section 154?

Section 154 identifies two categories of persons who can exercise this power:

• the Commissioner; or
• an officer authorised by the Commissioner.

This means that the power is not granted indiscriminately to every person working in the GST administration.

The officer exercising the power must either be the Commissioner or be authorised by the Commissioner for this purpose.

From Whose Possession Can Samples Be Taken?

Section 154 states that samples may be taken from the possession of any taxable person.

Therefore, the provision is connected with goods in the possession of a taxable person and does not require the goods to be in a particular location such as only a registered business premises.

Depending on the circumstances, the relevant goods could be examined where they are found in the possession of the taxable person, subject to the applicable GST procedure.

What Is the Purpose of Taking Samples?

Section 154 does not specify one particular purpose for which samples must be taken.

Instead, it uses the expression “where he considers it necessary.”

This gives the authorised officer the ability to take samples when physical examination or testing of goods is considered necessary for a GST proceeding.

For example, samples may become relevant where the tax authorities need to understand:

• the nature of goods;
• their physical characteristics;
• their composition;
• their classification;
• whether the goods correspond with their description;
• whether goods claimed to be exempt are actually covered by the relevant exemption;
• whether goods correspond with declarations or records; or
• other factual characteristics relevant to the administration of GST.

The precise reason for taking a sample will depend on the facts and circumstances of the particular proceeding.

Section 154 Is About Goods, Not Services

A significant point is that Section 154 specifically refers to samples of goods.

Goods are tangible movable property, whereas services are activities or transactions that do not ordinarily have a physical sample that can be taken in the same manner.

Therefore, Section 154 is principally a physical-goods examination provision.

For a service-related GST issue, the relevant evidence would ordinarily consist of documents, agreements, invoices, records, statements, digital information or other material rather than a physical sample under Section 154.

Why Can Sampling Be Important Under GST?

GST liability can sometimes depend upon the characteristics of the goods being supplied.

For example, classification under the applicable tariff heading may depend on:

• material;
• composition;
• ingredients;
• technical specifications;
• intended use;
• manufacturing process; or
• other physical characteristics.

Similarly, whether goods fall within a particular exemption or notification may depend upon their precise nature.

A physical sample can therefore assist the tax authorities in verifying the actual nature of the goods rather than relying solely on descriptions appearing on invoices or records.

Example – Product Classification

Suppose a manufacturer supplies a specialised chemical product.

The taxpayer classifies the product under a particular GST tariff heading.

During a verification proceeding, the tax authority considers that the physical composition of the product needs to be examined.

The authorised officer may take a sample under Section 154 where the statutory power is considered necessary.

The sample can then be used for the relevant examination or testing procedure.

The actual classification would still have to be determined according to the applicable GST law and tariff provisions.

Example – Disputed Description of Goods

Suppose a taxpayer’s invoice describes a product as one type of manufactured item.

During physical verification, the tax officer finds that the goods appear materially different from the description contained in the records.

A sample may be taken where necessary so that the actual nature of the goods can be examined.

The sample can provide supporting evidence for determining the factual characteristics of the goods.

Example – Exempt Goods

Suppose a taxpayer claims that certain goods qualify for an exemption under a GST notification.

The eligibility for the exemption depends upon the specific characteristics or composition of the goods.

The authorised officer may consider taking a sample where necessary to verify whether the goods satisfy the relevant description or conditions.

Section 154 provides the statutory authority for taking the sample.

Receipt for Samples Taken

One of the most important safeguards expressly contained in Section 154 is the requirement to provide a receipt for the samples taken.

The officer cannot simply take a sample without acknowledging that the sample has been taken.

The receipt provides documentary evidence that:

• samples were taken;
• samples were taken from the taxable person’s possession; and
• the quantity or description of the samples can be recorded as appropriate.

This is particularly important where the goods have commercial value.

Why Is the Receipt Important?

The receipt creates a record of the sampling action.

For a taxable person, it can help establish:

• what goods were sampled;
• when the sample was taken;
• that the sample was taken by GST authorities;
• the quantity or description of the sample, where recorded; and
• the connection between the sample and the underlying GST proceeding.

The receipt can therefore become an important part of the documentary record.

Does Section 154 Permit Taking All Goods?

Section 154 is specifically a power to take samples.

It should not automatically be treated as a general power to seize the entire stock of goods.

The CGST Act contains separate provisions dealing with inspection, search and seizure, including Section 67.

Section 154 serves a different purpose: obtaining samples where the Commissioner or authorised officer considers this necessary.

Therefore, sampling and seizure should not be treated as the same legal action.

Section 154 vs Section 67

The distinction between Sections 154 and 67 is important.

Basis	Section 154	Section 67
Main purpose	Taking samples	Inspection, search and seizure
Subject	Samples of goods	Goods, documents, books or things covered by the provision
Authority	Commissioner or officer authorised by Commissioner	Proper officer of specified rank acting under Section 67
Nature	Sampling power	Enforcement/search and seizure power
Receipt	Receipt for samples expressly required	Separate documentation applies to seizure and related actions
Main focus	Obtaining samples where necessary	Investigation and protection of revenue in specified circumstances

Section 67 contains specific statutory conditions for inspection and search and seizure. Section 154 is a separate and narrower provision dealing with samples.

Section 154 vs Section 68

Section 68 deals with inspection of goods in movement.

Under Section 68, the Government may require the person in charge of a conveyance carrying specified consignments to carry prescribed documents and devices. Where the conveyance is intercepted, the proper officer may require production of prescribed documents and devices and may inspect the goods.

Section 154 is different.

Section 68

Concerned primarily with goods in movement and verification during transportation.

Section 154

Concerned with taking samples of goods from the possession of a taxable person where considered necessary.

The two provisions can therefore operate in different situations.

Section 154 vs Section 70

Section 70 gives the proper officer power to summon a person to give evidence or produce documents or other things during an inquiry.

Section 154, on the other hand, specifically concerns the physical sampling of goods.

Therefore:

Section 70 → Evidence and documents through summons

Section 154 → Physical samples of goods

They address different forms of evidence and different statutory powers.

Section 154 and GST Inspection

Section 154 may be relevant during GST inspection or verification where the officer needs to examine the physical characteristics of goods.

However, Section 154 itself does not set out a complete inspection procedure.

Other provisions of the CGST Act and Rules may govern the particular inspection, search, verification, testing, documentation and subsequent proceedings.

Therefore, Section 154 should be read in conjunction with the other applicable provisions rather than treated as an independent code for every sampling situation.

Section 154 and Section 71

Section 71 deals with access to business premises.

It allows an authorised officer to have access to the place of business of a registered person for purposes such as audit, scrutiny, verification and checks necessary to safeguard revenue.

Section 154 is narrower.

It specifically gives the power to take samples of goods where considered necessary.

Thus:

• Section 71 concerns access to business premises.
• Section 154 concerns taking samples of goods.

A sampling action may occur in the course of a broader verification activity, but the two sections serve different statutory purposes.

Is the Taxpayer Entitled to a Receipt?

Yes.

Section 154 expressly requires the Commissioner or authorised officer to provide a receipt for any samples taken.

This is a direct statutory requirement and is an important procedural record for the taxable person.

What Should a Taxpayer Check on the Receipt?

A taxpayer should preserve the receipt carefully and, where the document contains relevant details, verify that it correctly identifies the sampled goods.

The taxpayer should ideally check details such as:

• description of goods;
• quantity of sample;
• date;
• relevant identification details;
• officer details; and
• any reference number mentioned in the document.

If the receipt contains an error, the taxpayer can bring the issue to the attention of the officer through the appropriate channel.

Can Samples Be Taken From a Registered Person?

Yes.

Section 154 refers to any taxable person.

A registered taxable person whose goods are subject to a GST proceeding can therefore be subject to the sampling power where the statutory conditions are met.

The actual circumstances will determine whether taking samples is considered necessary.

Can Samples Be Taken From Goods in Stock?

Yes, where the goods are in the possession of a taxable person and the authorised officer considers sampling necessary.

For example, goods held as:

• finished stock;
• trading inventory;
• raw materials;
• semi-finished goods; or
• other business inventory

may potentially be relevant depending on the GST proceeding.

The provision itself does not prescribe a particular category of inventory.

Does Taking a Sample Mean the Taxpayer Is Guilty of a GST Offence?

No.

The act of taking a sample does not by itself establish that the taxpayer has committed an offence or that tax has been short paid.

Sampling is an evidence-gathering mechanism.

The sample may be taken simply because the authority considers physical verification necessary to determine the correct GST position.

Any tax demand, penalty or other legal consequence would have to arise under the applicable statutory provisions and procedures.

👉 Read More → Section 156 – Persons deemed to be public servants

Does Taking a Sample Automatically Mean a Tax Demand Will Follow?

No.

A sample may support an investigation or verification, but taking a sample itself does not create a tax demand.

The ultimate GST treatment depends upon the applicable provisions of the CGST Act, Rules, notifications and the facts established in the proceeding.

Can Sampling Affect GST Classification?

It can be relevant where classification depends upon the physical or technical characteristics of the goods.

For example, two products may have similar commercial names but different compositions or specifications that result in different tariff classifications.

In such cases, testing or examination of a representative sample may assist in determining the actual characteristics of the goods.

However, classification is ultimately a matter of applying the relevant legal provisions to the established facts.

Sampling and Laboratory Testing

Section 154 itself gives the authority to take samples but does not prescribe a complete laboratory-testing framework in its wording.

Where testing is required, the sample may be examined according to the applicable departmental procedure and relevant technical or laboratory arrangements.

The exact testing process can depend on the nature of the goods and the issue under examination.

Therefore, it is important not to assume that every sample taken under Section 154 must necessarily be sent to a laboratory.

Sampling and Evidence

A physical sample can be valuable evidence because it can help establish the actual characteristics of goods.

For example, documentary records may describe a product in a particular way, while physical examination may reveal characteristics relevant to:

• classification;
• exemption;
• valuation-related questions;
• product identity;
• composition; or
• compliance with applicable GST requirements.

The evidentiary significance of the sample will depend on the issue being investigated and the manner in which the sample is examined and documented.

Practical Example – Manufacturer

A manufacturer produces a specialised product and classifies it under a particular tariff heading.

During GST verification, the officer needs to confirm the product’s physical characteristics.

The Commissioner or authorised officer may take a sample under Section 154 where considered necessary.

The taxpayer should receive a receipt for the sample taken and retain it with its GST records.

Practical Example – Trader

A trader stores multiple products in a warehouse.

The GST authorities are examining whether certain goods correspond with the descriptions and classifications declared in the business records.

Where necessary, an authorised officer may take samples from the goods in the taxable person’s possession.

The receipt provides a record of the sampling action.

Practical Example – Goods With Different Variants

Suppose a business sells several variants of a product.

Only some variants are claimed to qualify for a particular GST treatment.

The authority may need to examine the physical characteristics of the relevant variants.

Sampling can help establish whether the actual goods correspond with the description and classification relied upon by the taxpayer.

Practical Responsibilities of a Taxpayer

When GST authorities take samples under Section 154, a taxpayer should generally:

1. Cooperate with a valid sampling action.
2. Request and preserve the receipt for the samples.
3. Check the description and quantity recorded, where applicable.
4. Maintain copies of relevant stock and purchase records.
5. Preserve invoices and documents relating to the sampled goods.
6. Maintain product specifications and technical documents where relevant.
7. Record the sampling action internally.
8. Seek professional advice if the sampling is connected with a significant dispute or investigation.

These steps help maintain a clear documentary trail.

Importance of Product Records

Businesses dealing in manufactured or specialised goods should maintain proper product documentation.

Depending on the nature of the business, useful records may include:

• product specifications;
• technical literature;
• manufacturing records;
• laboratory reports;
• purchase invoices;
• sales invoices;
• stock records;
• test certificates;
• product catalogues; and
• classification documents.

Such records can help establish the factual characteristics of the goods if questions arise during GST verification.

Section 154 and Burden of Proof Under Section 155

Section 155 deals with the burden of proof in relation to a claim of eligibility for input tax credit.

It provides that where a person claims eligibility for input tax credit under the CGST Act, the burden of proving that claim lies on that person.

Section 154 and Section 155 deal with different subjects.

Section 154

Power to take samples of goods.

Section 155

Burden of proving an ITC claim.

They may appear in the same part of the Act, but their legal functions are different.

Section 154 and Section 153

Section 153 deals with taking assistance from an expert.

It permits an officer not below the rank of Assistant Commissioner, having regard to the nature and complexity of the case and the interest of revenue, to take assistance of an expert at any stage of scrutiny, inquiry, investigation or other proceedings.

This can be relevant where a GST matter involves specialised technical questions.

Section 154, by contrast, specifically gives the power to take samples.

Thus:

Section 153 → Expert assistance

Section 154 → Taking samples

In a technically complex case, both provisions may become relevant in different ways.

Section 154 and Section 151

Section 151 concerns the power to collect statistics.

Section 154 has no general statistical purpose.

Its focus is the physical sampling of goods where the authorised authority considers sampling necessary.

Therefore, Section 154 should not be confused with the information-gathering powers associated with statistical collection.

Is Section 154 a Search and Seizure Provision?

No.

Section 154 should be distinguished from Section 67, which specifically deals with inspection, search and seizure.

Taking a sample does not automatically mean that the entire goods or stock have been seized.

The purpose of sampling is to obtain a representative quantity of goods for examination where necessary.

Where the statutory conditions for search or seizure are separately satisfied, the relevant provisions of Section 67 may apply.

Does Section 154 Apply Only During Investigation?

Not necessarily.

The wording of Section 154 simply states that the Commissioner or authorised officer may take samples where he considers it necessary.

The provision itself does not restrict sampling to one particular type of proceeding.

Depending on the circumstances, sampling may be relevant during verification, scrutiny, inspection, inquiry, investigation or another GST proceeding where physical examination of goods is necessary.

The precise context must be determined from the facts and the applicable provisions governing the proceeding.

Why the Receipt Requirement Matters

The receipt requirement is particularly important because samples are physical property belonging to the taxable person.

A documented receipt creates an official record of the goods taken as samples.

For the taxpayer, the receipt can help establish the sampling action if questions later arise concerning:

• quantity;
• identity of the goods;
• date of sampling;
• the authority involved; or
• the subsequent treatment of the sample.

Therefore, the receipt should be preserved carefully.

Key Points of Section 154

The most important points of Section 154 can be summarised as follows:

1. Section 154 deals with the power to take samples.
2. The power relates specifically to samples of goods.
3. The Commissioner can exercise the power.
4. An officer authorised by the Commissioner can also exercise the power.
5. Samples can be taken from the possession of any taxable person.
6. Sampling can be undertaken where the authorised person considers it necessary.
7. The provision does not restrict sampling to one particular GST proceeding.
8. A receipt must be provided for samples taken.
9. The receipt creates a documentary record of the sampling action.
10. Sampling is different from seizure.
11. Section 67 separately deals with inspection, search and seizure.
12. Section 68 deals with inspection of goods in movement.
13. Section 70 deals with summons to give evidence or produce documents.
14. Section 153 deals with assistance from an expert.
15. Section 155 deals with the burden of proof for an ITC claim.
16. Taking a sample does not by itself establish a GST offence.
17. Taking a sample does not automatically create a tax demand.
18. Sampling may be useful where the physical or technical characteristics of goods are relevant.
19. Taxpayers should preserve the receipt and supporting records relating to sampled goods.
20. Product specifications, invoices, stock records and technical documents may be useful when the characteristics of goods are under examination.

👉 Read More → Section 154 – Power to take samples

Section 154 – Frequently Asked Questions

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