High-sea sales to attract IGST only once, clarifies CBEC

Surabhi New Delhi | Updated on January 27, 2018


It will be levied at the time of Customs clearance

High-sea sale transactions or imports will attract Integrated Goods and Services Tax (IGST) only once at the hands of last importer on the final price of the item, said the Central Board of Excise and Customs (CBEC).

The clarity was need as it was impacting imports in many crucial sectors such as power and telecom.

“The GST Council has already decided that IGST on high-sea sale transactions of imported goods, whether one or multiple, shall be levied and collected only at the time of importation that is when the import declarations are filed before the Customs authorities for the customs clearance purposes for the first time,” said the CBEC, adding that the IGST would be levied on the final value of the product.

However, the importer or the last buyer in the chain would be required to furnish the entire chain of documents such as original invoice, high-seas-sales-contract, details of service charges and commission paid to establish a link between the first contracted price of the goods and the last transaction, it added.

“High-sea sales of imported goods are akin to inter-State transactions,” stressed the CBEC. Under GST laws, IGST, which is refundable, is levied on imports and exports.

The confusion had arisen as high-sea sale transactions or such imports go through multiple buyers, where in the original importer sells the goods to a third person before the goods are entered for customs clearance.

More clarifications sought

Questions had arisen both within industry and tax officials whether IGST would be levied for each transaction, which would make it cumbersome and expensive.

Tax experts welcomed the move but said that the government also needs to clarify whether such sales would exempt on the hands of the high-seas seller and consequently trigger the reversal of input credit.

“There was lot of confusion in the industry on the taxability of high-seas sale i.e. whether it is taxable twice or only once in the hands of the ultimate importer,” said Abhishek Jain, Tax Partner, EY.

According to Pratik Jain, Partner and Leader Indirect Tax, PwC: “It states that IGST would only apply in the hands of ultimate importer and the sales made by intermediary company would not be liable.”

Published on August 02, 2017

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