Transactions taking place before filing of bill of entry are termed as “high sea sale” transactions under common trade practice where the original importer sells the goods to a third person before the goods are entered for customs clearance.

The above definition implies that “high sea sale” transactions refers to all those sale of goods which take place on the sea between sellers and importers before the imported goods reaches the Customs authorities for customs clearance.

This further implies that the goods are yet on high seas which means after their dispatch from their port/airport of origin and before their arrival at the port/airport of destination.

Nature of supply in case of “high sea sale” transactions:

As per Section 7(2) of the IGST Act, supply of goods in the course of import into the territory of India, till they cross the Customs frontiers of India shall be deemed to be a supply in the course of Interstate trade or commerce.

All high seas sale transactions are covered within definition of interstate supply.

Impact of GST in case of “high sea sale” transactions:

  1. Levy of GST in case of “high seas sale” transactions has created a lot of confusion since such transactions or imports generally go through multiple buyers wherein the original importer sells the goods to a third party before the goods are entered for customs clearance.
  2. This had lead to doubts like whether GST would be levied in case of each of the transactions occurred in between.
  3. GST Council has clarified that IGST is not levied in case of High sea sale transactions, though regarded as supply in the course of interstate trade or commerce. This is because, the supply takes place before filing of bill of entry and IGST in case of importation of goods can be levied at the time of filing of Bill of Entry.
  4. IGST in case of the above transactions shall be levied and collected only at the time of importation and that is when the import declarations are filed before the Customs authorities for the customs clearance purposes for the first time.
  5. This happens when goods reach the last buyer in the entire chain of transactions.
  6. The last buyer in the entire chain of transactions shall be liable to pay IGST and would be required to submit documents like - 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.
  7. IGST will be payable on the final amount arrived at after including all value additions accruing in each such high sale.
  8. Thus, it can be concluded that GST in case of “high seas sale” transactions shall be levied only once.


Goods have been imported from France by a company incorporated and registered in Nasik which have landed at Mumbai port but during their clearance are supplied by the Nasik company to a company in Pune. This supply continues to be in the course of inter-State trade or commerce.

In the above example, supply by Nasik company to recipient of Pune is high sea sale transaction and is not subject to levy of IGST. When Pune recipient files bill of entry, IGST has to be paid by the Pune recipient on the assessable value which shall include the margin charged by Nasik supplier also.

*Source – ICAI Background material

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How will the transaction be treated in hands on Nasik supplier under GST?. Is it to treated as exempt sales? Then how will ITC be dealt with? He cannot show as import and export in his books as he will not be able to upload B/E details to portal. Kindly clarify the other leg of transaction also.