High sea sales

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This query is : Resolved

Lubhani (Querist)

24 May 2016 IF MR. A (mumbai) HAS IMPORTED GOODS FOR a CONTRACT TO BE UNDERTAKEN BY HIM WITH HIS BUYER MR.B (Karnataka) , however he(mr.A) has himself cleared the goods from the customs. will the benefit of high sea sales be available to him ? the import of goods is intricately linked to the fulfilling of the contract with Mr. B and Mr. B is aware of the imports . mr. A will then raise an invoice to Mr. B for sale of imported goods .. Is CST leviable or benefit of sale in the course of import will be available ? Further the import has been carried out only to fulfill the sale to Mr. B .. it means that we were aware at the time of import that sales will be effected to whom and it was not like sale became certain when the goods were on the high seas will the benefit of sale in the course of import be still available ..
Please reply ASAP.

Rupesh Jain

Rupesh Jain (Expert)

24 May 2016 You have to make a agreememnt between A & B for sale of agreement when goods with in the sea, not the near any port. the A make sale to B for goods sale then no VAT/CSt will charge by A from B.

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Lubhani

Lubhani (Querist)

24 May 2016 thank you for your reply. but sir i have imported knowing before hand that the goods are to be given to Mr. B (karnataka). i.e. to say that sale has occassioned import thereby attracting section 5(2) of CST Act and making me eligible for exemption as sale in the course of import. However my only problem is that the goods have been cleared by Mr. A instead of Mr. B
Please reply. where is it written in the Act that agreement should have been entered into when in the seas to constitute sale in the course of import. Isn't it sufficient enough that the sale (by Mr. A to Mr. B ) has occassioned import of goods to be sold..
Kindly clarify the same ASAP.

Rupesh Jain

Rupesh Jain (Expert)

24 May 2016 you can read
Central Sales Tax Act:-

Section 5 (2) and Section 2 (ab) of Central Sales Tax Act,1956

Section 5 of the Central Sales Tax Act,1956 defines when a sales or purchase of goods is said to take place in the course of import or export. Sub-section (2) says the sale is deemed to take place in the course of import, and it reads as under:

“Sub-section (2) A sale or purchase of goods shall be deemed to take place in the course of import of the goods into the territory of India only if the sale or purchase either occasions such import or is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontiers of India.”

1.) A sale or purchase shall be deemed to take place in the course of import of the goods into the territory of India only if

(a) the sale or purchase either occasions such import, or

(b) is effected by a transfer of documents of title to the goods before the goods have crossed the customs frontier of India.

2.) Section 2(4) of the Sales of Goods Act,1930 defines “documents of title to goods,”

2(4) “document of title to goods” include a bill of lading, dock warrant, warehouse-keeper’s certificate, wharfinger’s certificate, railway receipt, warrant or order for the delivery of goods and any other document used in the ordinary course of business as proof to the possession or control of goods, or purporting to authorise, either by endorsement or by delivery, the possessor of the document to transfer or receive goods thereby represented”;

The bill of lading is considered to be document of title to goods and the sale can be made by endorsement delivery or by mere delivery of a blank bill of lading before the goods cross the customs frontier.

In Dictionary of English Language by Eari Jowitt, “document of title” is described as a document which enable the possessor to dealt with the property described in it, as if he were the owner. In this dictionary also it is mentioned that some documents of title (e.g. Bill of Lading) pass the ownership of goods represented by them; while other documents such as delivery order and dock warrant are mere authorities to obtain delivery of the goods.

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