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High Sea Sales - Related party VAT implication

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This query is : Resolved

Rahul Aggarwal (Querist)
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21 June 2011 Dear All,
One of our client is a foreign company (A), recently established its India Private Limited Company (B). Now B was to import goods from A and sell it to local buyers here in India.

My question is - can B first get the goods imported and while the ship is in sea, enters into high see sales agreement with local buyer? Having done so, will VAT will be applicable. Are there any case laws or past precedents like such, of importing and effectively paying no VAT tax? Please share the information

Regards,
Rahul

MJ Krishnamurthy

MJ Krishnamurthy (Expert)
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23 June 2011 Mr Agarwal,
An importer can sell the imported goods to local buyers on high sea sale basisi.e. by transfer of documents directly to the buyer.Here the importer should not take delivery of goods and should not split or alter the consignment in any way.The bill of lading itself is to be transferred by an endorsement to the buyer authorising him to receive the goods from the custom warehouse.The imorter can raise his own invoice for the sale.
MJK

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