Complex Sale

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Adil (Querist)

15 January 2011 I have a company that takes orders in India. We have stock in the USA. We ship it from the US on receipt of money in our bank. The shipper on record is my supplier X. The invoice is raised by me Y. The consignee is the end customer Z.

The invoice is billed to Z by Y in USD and INR equivalent in the invoice. The shipping documents have X as the shipper and Z as the consignee. I do have an invoice from the supplier X to me Y in USD. There is a 4% markup in my invoice to the end customer.

Is this counted as a high sea sale ? I guess not as the sale is before its shipped out. Is there anything wrong in this transaction ? Am i allowed to do a sale prior to receiving the goods while they are in another country ? What are the tax implications ? Basically my objective is to make the end customer the importer of record.

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)

15 January 2011 I could not understand your query clearly, but for highseas the material is to be sold during the movement.

Adil

Adil (Querist)

16 January 2011 We are still trying to structure the transaction perfectly. We are not sure if high sea sales is the right solution. We can do a high sea sale during the movement but would like to know if that makes complete sense in our business , keeping in mind taxes and compliances. The downside of high sea sales in our case is the agreement that we need to do with each of our customer as we would have a large number of customers who are end consumers.

We have a large number of customers in India who buy from us online. These customers are consumers and not resellers. So we receive the monies in advance from them into our Indian bank account. We have suppliers currently in USA and our stocks are in our US warehouse. If we import and then initiate a sale to our customers then we are liable to pay VAT. In this case the suppliers in USA will invoice us and then after import we invoice the end customer.
Is it possible for us to initiate a sale while the goods are in the US and import it in the name of the end consumer ? This way we are not liable to VAT. Is there anything wrong in a transaction where an Indian company raises an invoice on an end consumer while the goods are not in India ? Would the customs authorities have any issue with an Indian company invoice presented at the time of customs clearance ? Are there any other tax liabilities ?

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