High Seas Sale of goods under GST
Meaning of term High Seas Sale
High Sea Sales (HSS) is a sale carried out by the carrier document consignee to another buyer while the goods are yet on high seas. Goods on high seas means:
- After their dispatch from the port / airport of origin, AND
- Before their arrival at the port / airport of destination.
Consequences of HSS:
As mentioned above HSS contract / agreement should be signed after dispatch of goods from origin & prior to their arrival at destination. On concluding the HSS agreement, the bill of lading (B/L) should be endorsed in favour of the HSS buyer.
There is no bar on same goods being sold more than once on high seas. In such cases, the last HSS value is taken by customs for the purpose of levying of duty.
The tile of goods transfers to the HSS buyer prior to entry of goods in territorial jurisdiction of India.
The delivery from customs is, therefore, on account of last HSS buyer. Bill of entry (B/E) is also filed in the name of last HSS buyer.
Imposition of GST on HSS
As per section 3(3) of the IGST Act, supply of goods in the course of import into the territory of India till they cross the customs frontiers of India shall be deemed to be a supply of goods in the course of inter state trade or commerce.
Further, as per proviso to section 4(1) of IGST Act, intra state supply of goods shall not include supply of goods brought into India in the course of import till they cross the customs frontiers of India.
Thus, to conclude, sale in the course of import before customs frontier (i.e. HSS) would be subject to IGST.
Collection of GST on HSS
As per proviso to section 5(1) of IGST, the IGST on the goods imported into India shall be levied and collected in accordance with:
- The provisions of section 3 of the customs tariff act 1975
- At the point when duties of customs are levied on the said goods under section 12 of the customs act 1962
- On the value as determined under the Customs Tariff act.
Thus, the first importer will not charge IGST on sale made by him to the HSS buyer and the later / last HSS buyer (as the case may be) would pay IGST at the time clearing of goods from the customs as per customs act.
Last HSS buyer would be eligible to claim such IGST paid to the customs authorities subject to other provisions of the act. GST paid is this case shall be in addition to Basic Custom Duty paid to custom authorities.