High-sea sale is easiest to understand as a change of buyer while a shipment is still outside Indian customs clearance. Under the current wording of paragraph 8(b) of Schedule III to the CGST Act, a consignee's transfer to another person by endorsement of documents of title, after dispatch from a foreign port and before clearance for home consumption, is treated neither as a supply of goods nor as a supply of services. The three dates and the title-document trail matter; calling an invoice a high-sea sale does not.
That treatment answers only the GST character of the pre-clearance sale. It does not remove customs duty or import IGST. The person who ultimately files the bill of entry must work out import taxes under customs law, and the records should connect that bill of entry to every earlier transfer.
The three dates that settle the starting point
| Checkpoint | What to verify | Why it matters |
|---|---|---|
| Foreign dispatch | The bill of lading or other transport record shows that the goods left the port of origin. | Paragraph 8(b) is a post-dispatch fact pattern. A contract signed before dispatch needs a separate analysis. |
| Each title transfer | The consignee's agreement and endorsement identify the goods, parties, consideration and title document, and are dated before home clearance. | This is the evidence for the pre-clearance transfer. In a chain, repeat the check for every buyer and seller. |
| Home clearance | The bill of entry and customs record show when the goods were cleared for home consumption and who filed the declaration. | A sale after that date cannot rely on paragraph 8(b); examine the normal GST treatment instead. |
| Goods in a customs warehouse | Confirm whether the goods were already warehoused in India before the sale. | That is the separate paragraph 8(a) fact pattern. Do not copy the high-sea-sale conclusion into a warehouse-sale memo. |
The current CBIC text of Schedule III is the legal starting point. It refers to a consignee's supply by endorsement of documents of title after dispatch from a port outside India and before clearance for home consumption. A purchase order, an internal booking entry or a label in the ledger cannot replace that statutory sequence.
What is charged at import clearance?
The proviso to section 5(1) of the IGST Act links IGST on imported goods to section 3 of the Customs Tariff Act. It is collected at the point at which customs duties are levied, on the value determined under the applicable customs law. The correct rate, classification, exemption and valuation therefore depend on the goods and the notifications in force for that import; there is no responsible one-size-fits-all import GST percentage.
The official CBIC/GST Council import guide explains the high-sea-sale position in operational terms: whether there is one sale or a chain of sales, IGST is collected when the import declarations are filed for customs clearance for the first time, and the value addition in each high-sea sale forms part of the value on which IGST is collected at clearance. Use that guidance together with the current customs valuation record, not instead of it.
Worked example: A sells to B, then B sells to C
| Date | Event | Amount relevant to the example |
|---|---|---|
| 1 April | An overseas supplier dispatches machinery to India. Company A is the original consignee. | Foreign invoice and freight records are kept in the import file. |
| 5 April | A endorses the title document and agrees to sell the uncleared machinery to Company B. | HSS price: ₹10,50,000. |
| 9 April | B endorses the title document and sells the same uncleared machinery to Company C. | HSS price: ₹10,80,000; visible increase from B's purchase: ₹30,000. |
| 14 April | C files the bill of entry and clears the machinery for home consumption. | Customs assessable value and import taxes must be worked out from the actual record. |
On these assumed facts, the A-to-B and B-to-C transfers may fit paragraph 8(b) if the dispatch, endorsement and pre-clearance evidence is complete. The two commercial transfers do not by themselves create two separate GST supplies. The ₹30,000 calculation simply shows the visible price movement between the two HSS agreements; it is not the final customs value or an IGST computation.
For the customs working, retain the overseas invoice, transport documents, every HSS agreement and endorsement, the final bill of entry and the valuation bridge. The exact assessable value can also depend on classification, freight, insurance, additions, exemptions and other duties. A working paper that silently replaces those facts with a standard percentage is not defensible.
Where the ITC question actually sits
Import IGST paid at clearance may form part of the importer's input tax, subject to the ordinary section 16 conditions, business use and blocked-credit rules. Keep the bill of entry and payment evidence with the credit working. Basic Customs Duty is not input tax credit, and any compensation-cess credit has its own utilisation restriction.
There is a second, narrower point about apportionment. The current section 17(3) text excludes Schedule III activities from the value of exempt supply, except paragraph 5 and activities prescribed in respect of clause (a) of paragraph 8. Paragraph 8(b) is not named in that exception. On that text-based reading, a genuine paragraph 8(b) high-sea sale should not be mechanically put into the exempt-supply value merely because no GST is charged on the transfer. That conclusion does not approve every credit connected with the transaction: test the importer, section 16 conditions, blocked credits and actual business use separately.
What a review-ready file should contain
- A dated shipment timeline: foreign dispatch, each title-document endorsement, the bill-of-entry filing and home-clearance date on one page.
- The original import set: overseas invoice, purchase order or contract, packing list, bill of lading or other transport record, and dispatch evidence.
- The complete commercial chain: every HSS agreement, consideration, parties, goods description, title-document reference and responsibility for customs clearance.
- The customs set: bill of entry, importer details, classification, valuation workings, duty and import-IGST payment evidence, and any exemption or concession relied upon.
- The accounting bridge: map the foreign-currency entry, HSS consideration, bank payments, charges and ledger balances to the underlying documents.
- The tax position note: explain why paragraph 8(b) fits and why the facts are not a warehouse sale, merchant trade or post-clearance sale. Record the section 17 ITC conclusion separately.
- A current-law check: record the date on which the Schedule III, IGST and customs references were checked. Recheck rates and notifications on the transaction date.
Three fact patterns that change the answer
- Transfer after home clearance: once the goods are cleared, the paragraph 8(b) timing condition is gone. Examine the later sale under the normal GST rules.
- Sale of warehoused goods: goods already warehoused in India point to paragraph 8(a), not paragraph 8(b). The official import guide treats the warehouse-sale tax position separately.
- Foreign-to-foreign movement: goods moving from one non-taxable territory to another without entering India are a different Schedule III paragraph 7 fact pattern.
- Missing title trail: an agreement that does not identify the endorsed document, or a chain that cannot be reconciled to the final importer, is a reason to stop and resolve the evidence before using the HSS label.
What not to put in the return working
- Do not treat “neither supply of goods nor services” as “no import tax”. Customs duty and import IGST remain separate questions.
- Do not apply a generic IGST percentage without checking the goods classification, customs value and applicable notifications.
- Do not copy a warehouse-sale or post-clearance treatment into a paragraph 8(b) memo.
- Do not claim import ITC without matching the bill of entry, payment and ordinary eligibility conditions.
Related GST reading
If the transaction becomes a taxable domestic supply after clearance, the GST tax-invoice checklist covers the invoice particulars and timing controls. For the separate question of the place of supply for imported goods, see Place of Supply under GST.
Key takeaway
Before calling a transaction a high-sea sale, put the foreign-dispatch date, every title-document endorsement and the home-clearance date on one line. If that sequence is supported, paragraph 8(b) can keep the pre-clearance transfer outside the GST supply provisions; import IGST still arises at customs clearance, and value addition in a sale chain must be visible in the customs working. If a date or document breaks the chain, stop forcing the label and test the warehouse, post-clearance or other applicable treatment under the law in force on that transaction date.
Source note: the linked statutory and official guidance pages were checked on 13 September 2026. Rates, exemptions, customs valuation and procedural requirements can change, so the transaction-date position must be confirmed before filing or claiming credit.
