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What is high-seas sale, Is High-seas Sale taxable under IGST?

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What is high Seas Sale?

High Seas Sale is supply under GST, now the question

What is high-seas sale, Is High-seas Sale taxable under IGST?

“Sales in the course of Import”

In simple world sale taking place(i.e supply of goods, through change in title) before the goods physically reached to custom port of the Importing country/ or say before custom clearance.

Example:  MR. A from India buy Goods from a dealer outside India, and after purchasing Mr. A transferred the Goods the Buyer Mr. X, by changing tittle in documents and before the goods physically reaching the custom port of India or say Indian Territory. What is high-seas sale, Is High-seas Sale taxable under IGST

IS high Sea Sale Exempt from tax or taxable i.e IGST ?

Now before concluding this we need to discuss the two scenario here:-

Take the above  said  example for Buyer X , reproducing here

(Example:  MR. A from India buy Goods from a dealer outside India, and after purchasing Mr. A transferred the Goods the Buyer Mr. X, by changing tittle in documents and before the goods physically reaching the custom port of India or say Indian Territory. )

  1. Mr X, buyer is Located in India.
  2. Mr X, buyer located outside India.

Now as per basic understanding we can presume following

Case 1 (Buyer and high sales supplier both in India)

i.e Mr. X and Mr. A both located In India- Here we can easily say YES IT should liable to  IGST tax, 

               but question here is Who is liable to pay IGST I.E  Mr. A  or Mr. X or both

This is clear case of import and as per IGST ACT,  The IGST on imported goods shall be levied.

Either X is liable to Pay

Or Is A is liable to Pay

Or Both are liable to Pay.

We will conclude it later.

Case 2 (When buyer outside India and high seas supplier in India)

i.e  Mr. X located Outside India and Mr. A in India- Here some of us will say NO, it should not liable to IGST  because goods not Physically not reached to India.

Also some of us may say YES, it should be taxable in India, because seller of goods i.e Mr. A in our example, trader of India.

Clause (2) of section 7 of IGST ACT-  Supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be treated to be a supply of goods in the course of inter-State trade or commerce.

Assuming the above it is clearly define  that it should be taxable. But again it is debatable -i.e has India has right to collect tax on this high-seas transaction (case 2)

 

 

Before to conclude any thing form above two cases  here are the relevant provisions under GST Act-  FIND IGST ACT HERE

Relevant  GST provisions under the Act related to Import

Section 2 (10) of IGST ACT – Meaning of Import of Goods under under GST Act

‘‘import of goods” with its grammatical variations and cognate expressions, means bringing goods into India from a place outside India.

Will IGST levy on Imported goods and if yes on which Value?

As per the proviso of section 5 of IGST Act, 2017-   The IGST on Imported goods shall be levied  and  collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 on-

the value as determined under the said Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962.

 

Are supply of goods imported into-India before they cross the custom frontiers of India is liable for Inter-state transaction?

Yes, Refer- 

Clause (2) of section 7 of IGST ACT-  Supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be treated to be a supply of goods in the course of inter-State trade or commerce

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One thought on “What is high-seas sale, Is High-seas Sale taxable under IGST?”

  1. Ram.S IYER says:

    Good article. Very useful. One more clarification is when the buyer is outside India and IGST is not chargeable, is there a need for the High seas sale agreement at all.
    Kindly clarify.

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