Law Legends


High Sea Sales Under GST

'High Sea Sales' is a common trade practice whereby the original importer sells the goods to a third person before the goods are entered for customs clearance.

After the High sea sales of the goods, the Customs declarations i.e. Bill of Entry etc. is filed by the person who buys the goods from the original importer during the said sale.

High Sea Sales is neither treated as supply of goods nor supply of services in terms of the paragraph 8(b) of schedule III of the CGST Act. Hence, GST is not leviable on high sea sales. IGST is leviable only when the goods are cleared from customs for home consumption.

In summary, High Sea Sales allow the flexibility for the original importer to sell goods to another party before customs clearance, and IGST is levied at the time of customs clearance by the final buyer.

Circular No. 33 /2017-Customs, dated the 1st August, 2017 clarifies that IGST on high sea sale (s) transactions 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.

The importer (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/commission paid etc. to establish a link between the first contracted price of the goods and the last transaction.

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