High seas sale but under transfer of ownership
This query is : Resolved
09 December 2012
Dear Sir,
We are buying material from Singapore based company who is having their local office in India. In this senario, seller is singapore and first buyer is local company in india (as per bill of lading). Indian buyer is keeping goods under custom bonded warehouse and filing warehouse bill of entry in his name (indian office). We are buying those goods by filing ex-bond BOE on our name on same exchange rate thru "Transfer of Ownership" deed between First indian buyer and us. Then he raise local invoice to us without sales tax / VAT. This seems as equal to High Seas.
I have few doubts for above transaction :
1) Is this valid transaction ?
2) He raised local invoice without tax, is there any sales tax liability arise to us in future ?
3)Usually consideration value of High Seas is CIF + 2%. If my CIF import cost is 1 lac then I have to pay duty on 1 lac + 20,000 (2%)? but we are paying ex-bond duty on assessable value without 2%. Is this valid ?
We are buying material from Singapore based company who is having their local office in India. In this senario, seller is singapore and first buyer is local company in india (as per bill of lading). Indian buyer is keeping goods under custom bonded warehouse and filing warehouse bill of entry in his name (indian office). We are buying those goods by filing ex-bond BOE on our name on same exchange rate thru "Transfer of Ownership" deed between First indian buyer and us. Then he raise local invoice to us without sales tax / VAT. This seems as equal to High Seas.
I have few doubts for above transaction :
1) Is this valid transaction ?
2) He raised local invoice without tax, is there any sales tax liability arise to us in future ?
3)Usually consideration value of High Seas is CIF + 2%. If my CIF import cost is 1 lac then I have to pay duty on 1 lac + 20,000 (2%)? but we are paying ex-bond duty on assessable value without 2%. Is this valid ?
10 December 2012
Pls. resolve my query.............
12 December 2012
ANWERS TO YOUR QUESTIONS IN SAME SEQUENCE
ANS 1- TRANFER OF OWNERSHIP OR SALE FROM CUSTOMS BONDED WARHOUSES ARE VALID TRANSACTIONS UNDER CUSTOMS. YOU NEED TO GET PERMISSION FOR THE SAME FROM CONCERNED DC/ AT THE PORT OF WAREHOUSE
ANS- 2- NOW THIS IS THE TYPICAL PROBLAMATIC AREA WHETHER SALES TAX LEVY WILL BE THERE IN SUCH TRANSACTION. THERE HAS VARIOUS COURT RULING , BOTH ON POSITIVE AND NEGATIVE SIDE. I FEEL SUCH TRANSACTION DOES NOT QUALIFY QS SALE IN THE COURSE OF IMPORTS, HENCE VAT/CST ARE PAYABLE ON SUCH TRANSACTION, SALES TAX DEPT WAS ALSO MINTAINING THE SAME STAND.
ANS-3- 2% VALUE ADDITION IS REMOVED ON HIGH SEA SALES LONG BACK, THIS IS DONE VIDE CUSTOMS CIRCULAR NO 32/ 2004 DATED 11/5/2004( IF REQUIRED I WILL SEND THE CIRCULR)
ANS 1- TRANFER OF OWNERSHIP OR SALE FROM CUSTOMS BONDED WARHOUSES ARE VALID TRANSACTIONS UNDER CUSTOMS. YOU NEED TO GET PERMISSION FOR THE SAME FROM CONCERNED DC/ AT THE PORT OF WAREHOUSE
ANS- 2- NOW THIS IS THE TYPICAL PROBLAMATIC AREA WHETHER SALES TAX LEVY WILL BE THERE IN SUCH TRANSACTION. THERE HAS VARIOUS COURT RULING , BOTH ON POSITIVE AND NEGATIVE SIDE. I FEEL SUCH TRANSACTION DOES NOT QUALIFY QS SALE IN THE COURSE OF IMPORTS, HENCE VAT/CST ARE PAYABLE ON SUCH TRANSACTION, SALES TAX DEPT WAS ALSO MINTAINING THE SAME STAND.
ANS-3- 2% VALUE ADDITION IS REMOVED ON HIGH SEA SALES LONG BACK, THIS IS DONE VIDE CUSTOMS CIRCULAR NO 32/ 2004 DATED 11/5/2004( IF REQUIRED I WILL SEND THE CIRCULR)
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