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 which means
• After their dispatch from the port/ airport of origin AND
• Before their arrival at the port / airport of destination.
• There should be a HSS signed contract/agreement 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 the favour of the HSS buyer.
• There is no bar on same goods being sold more than once on high seas.
• The last HSS value is taken by the Customs for the purpose of levy of duty.
• The title of goods is transferred 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.
As per Section 7(2) 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 in the course of Interstate trade or commerce.
Further as per Section 8(1) of the IGST Act, intrastate 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 crossing the Customs frontier (HSS) would be subject to IGST.
Further as per Section 5(1) of the IGST Act, 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 on the value as determined under the said Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962.
Therefore, the harmonious interpretation of the Law concludes that 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 of clearing of goods from the Customs as per the Customs Act.
And the last HSS Buyer would be eligible to claim such IGST paid to the customs Authorities subject to other provisions of the Act. GST paid in this case shall be in addition to the Basic Custom Duty paid to the Custom Authorities.