No GST on Supply of Imported Goods on High Seas Sale basis as it Cover under Entry 8(b) of Schedule 111 of CGST Act: Gujarat AAR [Read Order]

The Gujarat bench of the Authority for Advance Ruling (AAR), ruled that there was no Goods and Service Tax applicable on the supply of imported goods on a high seas sale basis, as it falls under Entry 8(b) of Schedule III of the Central Goods and Service Tax  CGST Act, 2017.

M/s Tecnimont Private Limited, the applicant is a wholly owned subsidiary of Tecnimont S.P.A. Milan, Italy and an Engineering, Procurement, and Construction (EPC) company.

The applicant stated that in terms of the contract all imported materials required to be supplied under the contract will be sold by the applicant to IOCL on High Seas Sale [HSS] basis by endorsing bill of lading in favour of IOCL who will be filing the bill entry for warehousing and subsequently or home consumption by paying the applicable customs duty and IGST.

As per the applicant, during the course of importation, before the goods reach the Customs frontier in India, they enter into a HSS agreement with Indian Oil Corporation ltd ( IOCL )-. Transferring the ownership of the goods to IOCI- at the price agreed in the contract.  The applicant raises a custom invoice with respect to goods sold to IOCL under IISS without charging GST. The IOCL then filed a bill o1 entry as the import of the said goods and discharges customs duty and IGST by clearing the goods or warehousing or home consumption. The applicant treated this as a separate supply of goods distinct from the works contract supplies.

The letter of acceptance issued by IOCL to the applicant mentions the specific scopc olwork to be executed and the Schedule of Rates for identified supplies including goods imported from outside India.

The transaction of sale of goods by tecnimont pvt ltd ( TCMPL) to IOCL on High Seas Sale [HSS)  basis in terms of Contract No. 44AC910O-EPCC-l is covered under Entry 8(b) of Schedule III of the CGST Act. However in terms of the findings recorded supra, the value of such HSS supply would form a part of the transaction value under section 15, ibid, for computing the value of work contract service for charging GST

The two member bench comprising Riddesh Raval (Member SGST) and Amit Kumar Mishra (Member CGST) concluded that the transaction of sale of goods on high seas sale [HSS] basis by the applicant to IOCL in terms of Contract No. 44AC91 00-EPCC- I as has been held supra, is covered under entry 8(b) of Schedule III of the CGST Act, 2017 and therefore the HSS supply was neither a supply of goods nor a spply of services.

To Read the full text of the Order CLICK HERE

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