Shubham Jain

Meaning:-Transactions taking place before filing of bill of entry are termed as “high sea sale” transactions under common trade practice where the original importer sells the goods to a third person before the goods are entered for customs clearance. This supply is covered within definition of inter-state supply.

Provisions of Section 3(12) of Customs Tariff Act, 1975 in as much as in respect of imported goods provides that all duties, taxes, cess’ etc. shall be collected at the time of importation i.e. when the import declarations are filed before the customs authorities for the customs clearance purposes.

High sea sale transactions, though regarded as supply in the course of inter-state trade or commerce, are not subject to levy of IGST as the supply takes place before filing of Bill of entry and IGST in case of importation of goods can be levied at the time of filing of Bill of Entry.

Taxability of high sea sale under GST:-

It has been clarified vide Circular No- 33/2017- Customs dated 1st August 2017, that IGST on High Sea Sales transaction on imported goods, whether one or multiple, shall be levied and collected only at the time of importation i.e. when the import declarations are filed before the Custom authorities for the custom clearance purposes for the first time.

In case of high sea sales there can be 2 kinds of transaction:-

1. Transaction commences outside the territory of India and are concluded also outside territory of India.

For example- A company in Germany supplies goods from Germany to another company in Sri Lanka — this is not a supply in the course of inter-state trade or commerce because it commences and concludes outside the territory of India. It would be so, even if the goods were supplied by the company in Germany from Germany to a customer incorporated in India if the goods are not ‘brought’ into India but sold in high seas to yet another company in Singapore.

In order for every supply to come within the operation of Section 7(2) of IGST Act it requires that the resultant effect of the supply must cause the goods to enter the territory of India.

2. Transaction commences outside the territory of India but concluded by entering the territory of India.

For example:- Goods have been imported from France by a company incorporated and registered in Nasik which have landed at Mumbai port but during their clearance are supplied by the Nasik company to a company in Pune, this supply continues to be in the course of inter-state trade or commerce. Even though the supplier is in Nasik and the recipient is in Pune, since the goods have not yet crossed the customs frontiers of India at the time of supply. This supply comes within the operation of Section 7(2) of IGST.

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