High Sea sales (HSS) The state commercial Sales Tax commissionerate has detected a major scam of High Seas Sales (HSS) to avoid payment of Value Added Tax (VAT) and imposed a fine of Rs 100 crore, including the amount of tax avoidance, interest and penalty on a group of import companies at Kandla. According to a press release of the commercial tax commissionerate, though HSS is accepted under the import trade regulation, the companies involved in the case had entered into fraudulent HSS deals with a view to avoid payment of VAT. As per HSS rules, a cargo in voyage after it is loaded onto a ship can be sold to the final buyer and the latter does not have to pay any additional tax like VAT. According to officials, the final buyer saves around 25 to 30 per cent depending on the rate of the VAT on the commodity. But the commercial sales tax sleuths, during an inspection in the last two days at Kandla, found that nine companies involved in the import of edible oil had shown to have entered into fraudulent HSS deals of edible oil worth Rs 800 crore. Investigations revealed that the deals were not done on high seas but were local and inter-state sales to avoid VAT. Officials have seized goods worth Rs 60 crore. In another case, sleuths detected irregularities in stock transfer of imported edible oil worth Rs 75 crore during stock verification at the business premises of an import company at Gandhidham. High Sea sales (HSS) is a sale carried out by the actual consignee (ie, the consignee shown in the Bill of Lading) to another buyer while the goods are yet on high seas or after their dispatch from the port of loading (POL) and before their arrival at the port of discharge (POD). HSS contract/agreement should be signed after dispatch of goods from origin & prior to their arrival at destination. The agreement should be on stamp paper. The word ‘Sea’ appearing in HSS should not be taken by it’s literal meaning. As long as the sale is formalized after dispatch from port of origin and before arrival at the first port of discharge at destination, such sale is considered as HSS. On concluding the HSS agreement, the B/L should be endorsed in favour of the new buyer. If the seller does not mind disclosing original import values to HSS buyer, in such case it is better from custom clearance point of view for the seller to endorse the B/L, invoice , packing list in favour of the HSS buyer. The endorsement should read “Transferred on High Sea Sales basis to M/S ——– for a sales consideration of Rupees ——–”. Such endorsement should be stamped and signed by the HSS seller. Sometime HSS buyers buy goods after their arrival. Such sale are not HSS. The stamp paper on which the HSS agreement is executed must not bear the stamp paper purchase date as being post cargo arrival date. Such a case can easily be detected by customs as being a post arrival sale. The IGM should be filed by the carrier in the name of the HSS buyer. If not Import General Manifest (IGM) should get amended for which Customs will impose a penalty. Same goods can be sold more than once on high seas. In such cases, HSS agreement should give indication of previous title transfers. The last HSS buyer should also obtain copies of previous HSS agreement as such documents may be called upon by the customs. HSS is considered as a sale carried out outside the territorial jurisdiction of India. Accordingly, no sales tax is levied in respect of HSS. The title of goods transfers to HSS buyer prior to entry of goods in territorial jurisdiction of India.
Posted on: Sat, 10 Aug 2013 16:33:44 +0000
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