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Value in case of High Seas Sale for the purpose of Customs & GST – An inquisitive Study

Value for payment of customs duty: Price relevant for customs valuation under section 14(1) of Customs Act, 1962 is the price for delivery at time and place of importation.

Invoice value of original import or the price actually payable by buyer? High sea sale (HSS) means sale of goods by transfer of documents before clearance of goods from customs. In case of high sea sale (HSS), price charged by importer to assessee would form the assessable value and not the invoice issued to the importer by foreign supplier. – National Wire v. CC 2000(122) ELT 810 (CEGAT) * Godavari Fertilizers v. CC (1996) 81 ELT 535 (CEGAT).

What if the last purchase price is less than original import price? If the purchase is on high seas, the selling price will be naturally higher than the price at which the original buyer imported the goods. However, even if price is lower, the duty will be payable on price at which goods are sold on high seas basis to final importer. Original price at which original buyer purchased the goods cannot be basis for valuation – Excel Glasses Ltd. v. CC 2004 (166) ELT 496 (CESTAT) (In this case, price was lower due to one year delay in arrival of ship).

In Tata Power Co. Ltd. v. CC (2009) 240 ELT 742 (CESTAT), the sale was on high seas. The agreement provided that service charges for services like tender negotiations, participation in international bidding etc. were payable. Bank charges, facilitation fee, demurrage and survey fees were payable at fixed rates as per agreement. It was held that all these are includible as the charges were condition of sale of goods.

CBIC circular No. 32/2004-Cus dated 11-5-2004 has clarified that the valuation should be on basis of last sale price. Even if there are more than one high sea sales, the last sale price should be taken for purpose of valuation, as that is the price at which final importation has been caused. If importer is unable to produce original invoice, high sea sale (HSS) contract etc. to establish link, valuation can be done on basis of Valuation Rules.

CBIC Circular No. 33/2017-Cus dated 1-08-2017, The GST council has decided 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. Further, value addition accruing in each such high sea sale shall form part of the value on which IGST is collected at the time of clearance.
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. In case of a doubt regarding the truth or accuracy of the declared value, the department may reject the declared transaction value and determination the price of the imported goods as provided in the Customs Valuation rules.

Therefore, IGST payable on the [LAST PURCHASE PRICE (+) BASIC CUSTOMS DUTY (+) SOCIAL WELFARE SURCHARGE (+) ADDITIONAL CUSTOMS DUTIES] @ applicable GST rates.

High seas sales agreement to be on stamp paper and dated after ship commences journey – As per CC, ACC. Mumbai Facility Notice No. 18/2012 dated 22-5-2012 [280 ELT T15], High Seas sale agreement should be on stamp paper of Rs. 100 in Maharashtra [The reason given is that the agreement is similar to Customs bond. Really it is not similar to customs bond at all. However, instead of fighting over petty issues, advisable to execute agreement on stamp paper of value as per State law.

Note: The agreement date should be after the ship has started sailing, not because law requires so, but to avoid harassment of customs and sales tax authorities.

Elective Subjects in CA Finals – Which Elective Subject Should a Student Choose

The CA Final Elective paper was introduced by ICAI in 2018. This states that in 6th paper, CA aspirants can select a subject of their choice among the six given choices. The purpose behind this change was to bring a qualitative reform in the education system. Continue reading “Elective Subjects in CA Finals – Which Elective Subject Should a Student Choose”

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Which Subject is More Difficult in CA Intermediate? – Everything you Need to Know

As we all know that opinions on the question about the most difficult subject in CA Intermediate may vary from person to person which is quite obvious. Since every student has its own qualities and skills, the subject interest changes from one individual to another.
Continue reading “Which Subject is More Difficult in CA Intermediate? – Everything you Need to Know”

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Best Faculty for CA Final Direct Tax – Bhawar Borna Sir – Crack the Exam in First Attempt Score Exemption

Are you too in your Finals of CA and wishing to clear it in first attempt? Are you worried about your grades in Direct Tax? If yes, then the duration of reading this information can be the life changing point for you. The CA finals can be considered as the most crucial period for any CA aspirant. The stress in this period is very general.
Continue reading “Best Faculty for CA Final Direct Tax – Bhawar Borna Sir – Crack the Exam in First Attempt Score Exemption”

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New GST return mechanism – Challenges ahead

GST and Taxation for MSMEs: The Goods and Services Tax (GST), was introduced as a single, straightforward tax system to replace multiple indirect taxes. The GST has served as an efficient tax system by bringing in more transparency and streamlining the tax filing process for both the government and the taxpayers. In order to simplify the compliance procedure further for GST-registered businesses, the 31st GST Council meeting proposed a new return system. Continue reading “New GST return mechanism – Challenges ahead”

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Whether GST payable on director’s remuneration? Recent AAR on the same is disputable…!

Services by employee to employer is outside the ambit of taxable event and not chargeable to GST: Schedule-III of the Central Goods and Services Tax Act, 2017 provides that services by an employee to the employer in the course of or in relation to his employment shall not be treated as supply, and thus no GST would be applicable.

Continue reading “Whether GST payable on director’s remuneration? Recent AAR on the same is disputable…!”

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Standard Operating Procedure (SOP) for Non filers of Returns – Latest Circular 20/06/04/2019

Notice in GSTR – 3A for non filers of returns: Section 46 of the CGST Act read with rule 68 of the CGST Rules, 2017 requires issuance of a notice in FORM GSTR-3A to a registered person who fails to furnish return under section 39 or section 44 or section 45 (hereinafter referred to as the “defaulter”) requiring him to furnish such return within fifteen days. Continue reading “Standard Operating Procedure (SOP) for Non filers of Returns – Latest Circular 20/06/04/2019”

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Pure Agent under GST and exclusion of expenditure incurred as pure agent from computation of GST

Introduction:

A pure agent is one who while making a supply to the recipient, also receives and incurs expenditure on some other supply on behalf of the recipient and claims reimbursement (as actual, without adding it to the value of his own supply) for such supplies from the recipient of the main supply. While the relationship between them (provider of service and recipient of service) in respect of the main service is on a principal to principal basis, the relationship between them in respect of other ancillary services is that of a pure agent. Continue reading “Pure Agent under GST and exclusion of expenditure incurred as pure agent from computation of GST”

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