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Highseas transaction in vat

Today we are going to discuss on  a Highseas transaction in vat which is:

  1. Export High Seas and Export direct
  2. Import High Seas and Import direct

These topics are very well known to the persons who have basic knowledge of VAT but the people who are unaware of VAT doesn’t know much about this.

Highseas transaction in vat relating to Export High Seas & Direct Export:

Direct Export: It is the simple export of goods from one country to another country. Goods are shipped from seller port & landed at buyer’s port.

For e.g. Amit of Delhi exported goods to Jack of London. The goods are shipped from the seller’s port & landed at the buyer’s port.

Export High Seas (High Sea Sales): It is a sale entered intobetween consignee and another buyer by an agreement while the goods are yet on high seas or after their shipped from the port/airport of origin and before their reaching at the port/ airport of destination. This agreement should be on stamp paper & should be signed after shipping of goods from origin & prior to their arrival at destination.

In short the sale is made on high seas i.e. in transit.  The bill of lading (B/L) should be endorsed in favor of the new buyer in case of High seas sale agreement.

In respect of air shipment, High Sea Sales seller (original seller) should write to the airline agent informing that an High Sea Sales agreement has been established with the High Sea Sales buyer (second buyer) and that the carrier document should therefore be considered as endorsed in favor of the High Sea Sales buyer and further the Import General Mani face (IGM) should be filed by the carrier in the name of the High Sea Sales buyer.

For e.g. Amit of Delhi sells goods to Jack of London. All the export procedures are completed. Now the agreement is made between the Jack of London & Nile of London for Purchase of goods. This agreement should be made while goods are in transit i.e. shipped from the buyer’s side & before receiving that seller’s end. In this Nile of London is considered as High seas Buyer.& Amit of Delhi considered as High Seas Seller.

Highseas transaction in vat relating to Import High Seas & Direct Import:

Direct Import: It is the simple Import of goods from one country to another country. Goods are shipped from seller port & landed at buyer’s port.

For e.g. Lalit of Maharashtra imported goods fromKrish of New York. The goods are shipped from the seller’s port & landed at the buyer’s port.

Import High Seas (High Sea Purchase):It is an agreemententered intobetween original buyer and High Seas buyer while the goods are yet on high seas or after their shipped from the port/airport of origin and before their reaching at the port/ airport of destination. This agreement should be on stamp paper & should be signed after shipping of goods from origin & prior to their arrival at destination.

In short the purchase is made on high seas i.e. in transit.  The bill of lading (B/L) should be endorsed in favor of the new buyer in case of High seas Purchase agreement.

For e.g. Lalit of Maharashtra purchase goods fromKrish of New York. All the export procedures are completed. Now the agreement is made between the Krish of New York& Prink of Sydney for Purchase of goods. This agreement should be made while goods are in transit i.e. shipped from the buyer’s side & before receiving that seller’s end. In this Prink of Sydney is considered as High seas Buyer. &Lalit of Maharashtra considered as High Seas Seller.

 

Benefits of High Seas Sales & Purchase:

Tax Benefit: The buyer of goods is not going to paid tax on goods imported high seas. If goods are not imported on high seas & the second buyer purchasing goods from the original buyer (importer) then he has to pay tax on it.

Where to shown Highseas transaction in Mvat Return

In MVAT return form 231, 232 & 233 etc. have a separate column relating to Import High Seas and Import direct i.e. Column no. 7(c) & 7(d): Imports (direct imports) & Imports (High Seas purchases). Now we are going one by one

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