News Update

GST - Neither SCN nor the order spell out the reasons for retrospective cancellation of registration, hence cannot be sustained: HCGST - Non-application of mind - If reply was unsatisfactory, details could have been sought - Record does not reflect that such exercise was done - Matter remitted: HCGST - Merely because a taxpayer has not filed returns for some period does not mean that registration is required to be cancelled with retrospective date also covering the period when returns were filed and taxpayer was compliant: HCGST - Petitioner's reply, although terse, is not taken into account while passing assessment orders - Petitioner put on terms, another opportunity provided: HCUnveil One Nation; One Debt Code; One Compliance Rule for Centre & StatesChina moves WTO against US tax subsidies for EVs & renewable energyMore on non-doms - The UK Spring Budget 2024 (See TII Edit)Notorious history-sheeter Mukhtar Ansari succumbs to cardiac arrest in UP jailTraining Program for Cambodian civil servants commences at MussoorieNY imposes USD 15 congestion taxCBIC revises tariff value of edible oils, gold & silver45 killed as bus races into ravine in South AfricaCBIC directs all Customs offices to remain open on Saturday & SundayBankman-Fried jailed for 25 yrs in FTX scamI-T- Once the citizen deposits the tax upon coming to know of his liability, it cannot be said that he has deliberately or willfully evaded the depositing of tax and interest in terms of Section 234A can be waived: HCHouthis attack continues in Red Sea; US military shoots down 4 dronesI-T- Secured creditor has priority charge over secured asset, over claims of I-T Department & other Departments; any excess amount recovered by Secured Creditor from auction of secured asset, over & above the dues payable to it, are to be remitted to the Departments: HCFederal Govt hands out USD 60 mn to rebuild collapsed bridge in BaltimoreI-T - Receipts of sale of scrap being part & parcel of activity and being proximate thereto would also be within ambit of gains derived from industrial undertaking for purpose of computing deduction u/s 80-IB: HCCanadian School Boards sue social media titans for 4 bn Canadian dollar in damagesI-T - Once assssee on year of reversal has paid taxes on excess provision and similar feature appeared in earlier years and assesee had payments for liquidated damages on delay of deliverables, no adverse inference can be drawn: HCFormer IPS officer Sanjiv Bhatt jailed for 20 yrs for planting drugs to frame lawyerST - Software development service & IT-enabled service provided by assessee was exempt from tax during relevant period, by virtue of CBEC's Notification & Circular; demands raised for such period not sustainable: CESTATUN says Households waste across world is now at least one billion meals a dayCus - Order rejecting exporter's request for conversion of Shipping Bills on grounds that the same has been made by exporter beyond period of three months from date of Let Export Order in terms of CBEC Circular No. 36/2010-Cus : CESTATIndia, China hold fresh dialogue for complete disengagement on Western borders: MEACus - No Cess is payable when Basic Customs Duty is found to be Nil: CESTATThakur says India is prepared for 2036 OlympicsCX - As per settled law, a right acquired as result of a statutory provision, cannot be taken away retrospectively unless said statutory provision so provides or by necessary implication has such effect: CESTAT
 
High Seas Sales in GST Regime

APRIL 26, 2017

By G Mohana Rao

HIGH Seas Sale is a sale wherein goods are still in high seas on its way to its destination. In such cases, the buyer as well as the seller are within the country but the goods are in high seas i.e. in-transit. The issue is whether such a sale is a local sale and if so, whether VATis leviable on such a sale is the key differentiator on the decision of whether to buy the goods after their import in India or on high seas.

So far, no VAT is being paid on High Sea Sales since the sale is beyond Indian boundaries. Now the concern of the trade is what after GST?! How the high seas sales are to be treated in the GST regime?! A lot of concernandconfusion is prevailing in the minds of the trade.

The Advisory Opinion 14.1 of the GATT Valuation Code stipulates that such transaction would constitute an   international transfer of goods.   The latter transaction which led to the import would be the relevant transaction for assessment under Section 14 read with the Rule 4 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 . CBEC Circular No. 32 of 2004 may also be referred in this respect.

In the GST regime too, the situation remains the same as to the nature of transaction i.e. ‘international transfer of goods'. In my humble opinion and in view of the Advisory Opinion 14.1 of the GATT Valuation Code, thehigh seas sales may have to be considered as international transfer of goods and as such shall not be taxed.

But, Proviso to Section 5(1) on Levy of IGST,provides that the integrated tax on goods imported into India shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 on the value as determined under the said Act at the point when duties of customs are to be levied on the said goods under section 12 of the Customs Act, 1962.

In line with the same, the Customs Act, 1962 has been proposed to be amended in the recent proposed legislation (passed by Lok Sabha). Accordingly, Section 3(7) of the Customs Act, 1962 states:

“(7) Any article which is imported into India shall, in addition, be liable to integrated tax at such rate, not exceeding forty per cent as is leviable under section 5 of Integrated Goods and Services Tax Act, 2017 on a like article on its supply in India, on the value of the imported article as determined under sub-section (8).”

Furthermore,section 3(8) of the Customs Act, 1962 stipulates that value of the goods for the purpose of levying Integrated tax shall be the assessable value besides Basic Customs Duty (BCD).

Section 3(9) provides that any article which is imported into India shall, in addition, be liable to goods and services tax compensation cess at such rate, as is leviable under section 8 of the Goods and Services Tax (Compensation to States) Cess Act, 2017 on a like article on its supply into India, on the value of the imported article as determined under sub-section 10 of section 3.

However, due to taxation of the complete supply chain and GST being the destination based consumption tax, there would be one major impact. Integrated tax (IGST) would in any case be levied on the full value of the goods including the high sea sale, if any, and the same will move along with the goods in further components of the supply chain. Thus, saving any state levies will be out of question. It would be a completely revenue neutral situation. The incentives for choosing the high sea sale route will simply evaporate and the number of such sales should drastically reduce once GST arrives on the scene. The buyers will resort to high seas route only in case of business need....for instance to ensure dispatch or to escape from hassles of import formalities etc. It appears that with the implementation of multi stage taxing of complete supply chain,many such creative accountings of the past will lose relevance.

(The author is Partner, Elysian Tax Advisors, Mumbai and the views expressed are strictly personal.)

GST Rollout | simply inTAXicating

GST RO(W)AD AHEAD | Episode 8 | Panel Discussion | simply inTAXicating

GST RO(W)AD AHEAD | Episode 7 | Panel Discussion | simply inTAXicating

Also See : TIOL TUBE Videos on GST

 

(DISCLAIMER : The views expressed are strictly of the author and Taxindiaonline.com doesn't necessarily subscribe to the same. Taxindiaonline.com Pvt. Ltd. is not responsible or liable for any loss or damage caused to anyone due to any interpretation, error, omission in the articles being hosted on the site)

 RECENT DISCUSSION(S) POST YOUR COMMENTS
   
 
Sub: VAT law not concerned with High Sea sales

I write this comment for the limited purpose of pointing out that there can be no incidence of VAT on high sea sales, as Article 286 of the Constitution reserves inter-State sales or purchases and purchase or sale in the course of import or export to the Parliament. Hence, CST Act, 1956 is the appropriate law to be referred, not VAT laws.

Posted by Gururaj B N
 
Sub: High Seas Sales in GST Regime

Nicely written article.

Posted by Samir Sinha
 

AR not Afar by SK Rahman

TIOL Tube Latest

Shri Shailendra Kumar, Trustee, TIOL Trust, giving welcome speech at TIOL Awards 2023




Shri M C Joshi, Former Chairman, CBDT




Address by Shri Buggana Rajendranath, Hon'ble Finance Minister of Andhra Pradesh at TIOL Awards 2023