High Sea Sales under GST

High Sea sales are often viewed in negative light because of the sales tax savings that it offers despite being fully legal and authentic. Now that GST has been made applicable, it will be interesting to see how will these controversial sales be affected due to it.

Section 5 of IGST says that there shall be levied a tax called the integrated goods and services tax IGST on all inter-State supplies of goods.

Section 7(2) deems “supply of goods imported into the territory of India, till they cross the customs frontiers of India to be a supply of goods in the course of inter-State trade or commerce.”

Reading both these section together, we can infer that when goods are supplied while in Indian territorial waters but before they cross the custom barriers of India, they will be deemed as ‘Inter-state supplies’. And since they are deemed as ‘Inter-state supplies’, they will attract IGST as such rates as may be prescribed.

Let’s try to understand this with an example.

Mr Smith is a trader in New York, USA who deals in iPhones. And there is one Mr Singh who owns a mobile shop in Karol Bagh, Delhi.

Mr Singh placed order of 50 iPhones with Mr Smith. Mr Smith packed the consignment and sent it through ship.

While the vessel was still in sea, Mr Singh was contacted by Mr Sharma of Ghaziabad who wanted to purchase 10 iPhones.

What did Mr Singh do? He gave the document of title of goods for 10 iPhones to Mr Sharma.

At this point of time, the ship was in Indian territorial waters but hadn’t crossed the custom barriers.

Now when 50 iPhones would come into India, 40 iPhones would be owned by Mr Singh and 10 of them would be owned by Mr Sharma.

This transaction between Mr Singh and Mr Sharma is called ‘High Sea Sales’.

The amount which Mr Sharma will be liable to pay to Mr Singh will include the price which Mr Singh paid to Mr Smith plus his profit margin plus IGST.

Eg – Mr Singh paid Rs 50,000 to Mr Smith per phone. He sold 10 phones to Mr Sharma at Rs 55,000/phone.

So, Mr Sharma will pay Rs 55,000 + IGST to Mr Singh.

And when Mr Sharma will go to port to collect his phones, he will be required to pay Basic Custom Duty on Rs 55,000/phone.

This is all about High Sea Sales under GST.

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High Sea Sales under GST

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Section 5 of IGST says that there shall be levied a tax called the integrated goods and services tax IGST on all inter-State supplies of goods.Section 7(2) deems “supply of goods imported into the territory of India, till they cross the customs frontiers of India to be a supply of goods in the course of inter-State trade or commerce.”Reading both these section together, we can infer that when goods are supplied while in Indian territorial waters but before they cross the custom barriers of India, they will be deemed as ‘Inter-state supplies’. And since they are deemed as ‘Inter-state supplies’, they will attract IGST as such rates as may be prescribed. Let’s try to understand this with an example.Mr Smith is a trader in New York, USA who deals in iPhones. And there is one Mr Singh who owns a mobile shop in Karol Bagh, Delhi. Mr Singh placed order of 50 iPhones with Mr Smith. Mr Smith packed the consignment and sent it through ship. While the vessel was still in sea, Mr Singh was contacted by Mr Sharma of Ghaziabad who wanted to purchase 10 iPhones. What did Mr Singh do? He gave the document of title of goods for 10 iPhones to Mr Sharma. At this point of time, the ship was in Indian territorial waters but hadn’t crossed the custom barriers. Now when 50 iPhones would come into India, 40 iPhones would be owned by Mr Singh and 10 of them would be owned by Mr Sharma.This transaction between Mr Singh and Mr Sharma is called ‘High Sea Sales’.The amount which Mr Sharma will be liable to pay to Mr Singh will include the price which Mr Singh paid to Mr Smith plus his profit margin plus IGST.Eg – Mr Singh paid Rs 50,000 to Mr Smith per phone. He sold 10 phones to Mr Sharma at Rs 55,000/phone. So, Mr Sharma will pay Rs 55,000 + IGST to Mr Singh. And when Mr Sharma will go to port to collect his phones, he will be required to pay Basic Custom Duty on Rs 55,000/phone.This is all about High Sea Sales under GST. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

Section 5 of IGST says that there shall be levied a tax called the integrated goods and services tax IGST on all inter-State supplies of goods.Section 7(2) deems “supply of goods imported into the territory of India, till they cross the customs frontiers of India to be a supply of goods in the course of inter-State trade or commerce.”Reading both these section together, we can infer that when goods are supplied while in Indian territorial waters but before they cross the custom barriers of India, they will be deemed as ‘Inter-state supplies’. And since they are deemed as ‘Inter-state supplies’, they will attract IGST as such rates as may be prescribed. Let’s try to understand this with an example.Mr Smith is a trader in New York, USA who deals in iPhones. And there is one Mr Singh who owns a mobile shop in Karol Bagh, Delhi. Mr Singh placed order of 50 iPhones with Mr Smith. Mr Smith packed the consignment and sent it through ship. While the vessel was still in sea, Mr Singh was contacted by Mr Sharma of Ghaziabad who wanted to purchase 10 iPhones. What did Mr Singh do? He gave the document of title of goods for 10 iPhones to Mr Sharma. At this point of time, the ship was in Indian territorial waters but hadn’t crossed the custom barriers. Now when 50 iPhones would come into India, 40 iPhones would be owned by Mr Singh and 10 of them would be owned by Mr Sharma.This transaction between Mr Singh and Mr Sharma is called ‘High Sea Sales’.The amount which Mr Sharma will be liable to pay to Mr Singh will include the price which Mr Singh paid to Mr Smith plus his profit margin plus IGST.Eg – Mr Singh paid Rs 50,000 to Mr Smith per phone. He sold 10 phones to Mr Sharma at Rs 55,000/phone. So, Mr Sharma will pay Rs 55,000 + IGST to Mr Singh. And when Mr Sharma will go to port to collect his phones, he will be required to pay Basic Custom Duty on Rs 55,000/phone.This is all about High Sea Sales under GST.

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High Sea Sales under GST