IGST to be levied only once on high sea sales

The Integrated Goods and Services Tax (IGST) would be levied only once for sales on the high seas at the time of clearance of import of goods from the Customs department.

There was ambiguity on whether IGST would be levied multiple times in such sales, for each leg of the transaction.

The Central Board of Excise and Customs has clarified that value addition accruing in each high sea sale transaction shall form part of the value on which IGST would be levied at the time of clearance. This means it would be payable on the value for the last buyer in the chain.

The importer would be required to furnish the entire chain of documents such as original invoice, high-seas sale contract, details of service charges, commission paid, etc, to establish a link between the first contracted price of the goods and the last transaction.

Pratik Jain of consultancy PwC says,"These transactions are quite popular in certain sectors such as power and telecom, and industry would be happy with the clarification."

The other aspect needing clarity is on whether it would be treated as exempt supply in the hands of the high seas seller, triggering a reversal of input credit in any manner, he said.