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The Telangana Authority of Advance Ruling (“AAR”) in Re: M/s AIE Fiber Resource and Trading (India) Private Limited. [Advance Ruling No. /07/2019 TSAAR Order No. 30/2021 dated December 24, 2021] held that no IGST is payable on supply of imported goods on High Sea Sales basis to Indian customers and proportionate reversal of input tax credit ("ITC”) is not required.
M/s AIE Fiber Resource and Trading (India) Private Limited, Hyderabad ("the Applicant”) is intending to supply imported goods to Indian customers on High Sea Sale (“HSS”) basis from Free Trade Warehousing Zone (“FTWZ”). The Applicant sells the imported goods before goods cross the customs frontier of India i.e., prior to clearance of goods from the customs to pre-identified customers.
The Applicant directs the FTWZ warehouse keeper to deliver the goods to a customer chosen by the Applicant.
The AAR, Telangana in [Advance Ruling No. /07/2019 TSAAR Order No. 30/2021 dated December 24, 2021] held as under:
It is to be noted that in our opinion, even prior to February 01, 2019 High Sea Sales were not taxable as IGST Act is only applicable in India as per Section 1(2) of the IGST Act and India is defined under Section 2(56) of the CGST Act applicable to IGST Act vide Section 20 of the IGST Act as under:
“(56) “India” means the territory of India as referred to in article 1 of the Constitution, its territorial waters, seabed and sub-soil underlying such waters, continental shelf, exclusive economic zone or any other maritime zone as referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976 (80 of 1976), and the air space above its territory and territorial waters;”
Thus, IGST can only be levied on the inter-state transactions (see Section 5(1) of the IGST Act) taking place inside the Indian territory. Since, High Sea Sales is taking place outside India IGST may not be leviable.
Further, in Circular No. 3/1/2018-IGST dated May 25, 2018 wherein it has been categorically stated that high seas sale transaction or bond sale transaction are not supply and no GST is leviable.
Furthermore, in 28th GST council meeting held on June 28, 2018 it was said that High Sea Sales is categorized as “No Supply”. Also, above-mentioned amendment is clarificatory in nature and thus, applicable with retrospective effect.
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