GST Liability on High Seas Sales (HSS)


High sea sales is not defined as such in GST law, however, as per normal parlance, it simply means sale/ purchase of goods during the importation of goods before the it reaches into Indian territories.

Taxability of HSS in India:

Taxability of HSS under GST can be discussed under following two undermentioned heads

1. Purchase of Goods:

a. Initial Provision: – Section 7(2) IGST Act – Inter State Supply – Supply of goods imported into the territory of India till they cross the customs frontiers of India.

According to definition given above High seas sales during the Importation of goods shall be treated as Inter State Supply and accordingly IGST shall be leviable on it.

b. However, Circular No. 33/2017- Cus., dated 1-8-2017 has clarified that IGST on HSS of 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 Customs authorities for the customs clearance purposes for the first time.

c. Moreover, as per Schedule III of CGST some activities & transactions shall not be treated as Supply: –

– Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India.

– Supply of goods by the consignee to any other person, by endorsement of documents of title to the goods, after the goods have been dispatched from the port of origin located outside India but before clearance for home consumption; (Inserted by CGST Amendment Act, 2018, effective from 01.02.19.

 d. Advance Ruling by Gujarat AAR: –

This ruling discussed the case where a person located in India supply goods in such manner that goods directly deliver by the Vendor (located outside India) to the buyer (located outside India) (Bill to Ship to transaction) and provide following ruling  –

Transactions Involved – Purchase of goods by Indian Supplier from foreign    Vendor – No GST leviable.

Basis of Decision – Import of Goods  (Section 2(10) )  – only if goods come within the territory of India, accordingly goods not imported and no GST Liability arise thereon. 


Initially High seas sales i.e. purchase during importation are taxable under GST law, however on demand of industry & avoid double taxation govt had amended the law and also as provided by Gujarat AAR  now no GST leviable on such transactions.

2. Sell of Goods during Importation 

(i) By referring the provisions mentioned under above clauses i.e. 3(b) &3(c), it is clearly evident that now no GST shall be leviable on High seas sale either it is purchase or sale.

(ii) More clarity provided by Schedule III in this respect which inserted two new clauses in this negative list as mentioned in clause 3(c) above.

(iii) However, as per Advance ruling provided by Gujarat AAR in case where a person located in India supply goods in such manner that goods directly deliver by the Vendor (located outside India) to the buyer (located outside India) and provide following ruling: –

Transaction Involve – Sell of goods by Indian Supplier to foreign vendor –  GST     shall be leviable as it is covered under definition of inter state supply and not covered under zero rated supply i.e. export.

Basis of Decision

a. Definition of Supply (Section 7 of CGST Act)- Selling goods for consideration in the course of business.

b. Definition of Inter State Supply (Section 7 (5)(a) – when the supplier is located in India and the place of supply is outside India.

c. Export of Goods – Taking goods out of India to a place outside India.

(iv) However, this ruling not covered the amendment made in Schedule III of CGST act as mentioned in above clause 3(c) , accordingly my advice is that the both the transactions i.e. Sale or Purchase of Goods in High Seas Sale or any kind of such supply arrangement in which goods are not imported into India and Supplied without touching Indian Territory are now out of purview of GST.

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Qualification: CA in Practice
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Location: DELHI, New Delhi, IN
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December 2020