Goods procured from one country and supplied to another doesn’t attract IGST: AAR

Goods procured from one country and supplied to another doesn’t attract IGST: AAR


Goods procured from one country and
supplied to another doesn’t attract


[Synthite Industries Ltd. – [2018] (AAR)]


Facts of the case:


  1. The applicant are in the business of trading in spices and spice products. They have two modes of transactions. In the first kind, the applicant receives order from a customer in USA for the supply of spice products. They place a corresponding order to a supplier in China for supplying the goods ordered by the customer in USA.
  2. The supplier in China, based on the request of the applicant, ship the goods directly to the customer in USA.
  3. In other words, the goods do not come to India. The Chinese supplier issues invoice to the applicant, for which, payment will be made by the applicant in due course. Subsequently, the applicant will raise invoice on the customer in USA, and collect the proceeds.
  4. Applicant filed an application for advance ruling to determine ifGST is leviable on sale of goods to the USA Company, when such goods would be shipped directlyfrom China to the USA without entering India.



Following observations were found:


  1. This case is like a ‘High Sea Sales’ which is a common trade practice whereby the original importer sells the goods to a third person before the goods are entered for customs clearance. After the High sea sale of the goods, the Customs declarations i.e. Bill of Entry etc is filed by the person who buys the goods from the original importer during the said sale.
  2. All inter-state transactions are subject to IGST. High sea sales of imported goods are akin to inter-state transactions. The council has decided that IGST on high sea sale(s) transactions of imported goods, whether one or multiple, shall be levied and collected only at the time of importation
    e. when the import declarations are filed before the customs authorities for the customs clearance purposes. The importer (last buyer in the chain) would be required to furnish the entire chain of documents
  3. Such as original Invoice, high-seas sales- contract, details of service charges/commission paid etc, to establish a link between the first contracted price of the goods and the last transaction. In case of a doubt regarding the truth or accuracy of the declared value, the department may reject the declared transaction value and determination the price of the imported goods as provided in the Customs Valuation rules.


  1. And accordingly on the basis of above authority held that The goods are liable to IGST

when they are imported into India and the IGST is payable at the time of importation of goods into India.


  1. The applicant is neither liable to GST on the sale of goods procured from China and directly supplied to USA nor on the sale of goods stored in the warehouse in Netherlands, after being procured from China, to customers, in and around Netherlands as the goods are not imported into India at any point.