Salient features of High Sea Sale cs executive professional notes
(i) If imported goods are sold to a buyer in India by transfer of documents of title of goods, before the goods have crossed the customs frontier of India, it will be treated as Sale or purchase in the course of import.
(ii) Where transfer of documents of title effects sale, such transfer should take place before the goods are moved out or customs station.
(iii) If the above mentioned conditions are satisfied in any sale transaction, then there will be no CST or VAT.
Sec. 5(2) of the CST Act prescribes two conditions for a sale or purchase of goods to be deemed to have taken place in the course of import of the goods into the territory of India if the sale or purchase either occasions such import or is effected by transfer of documents to the title of goods.
Thus there are two limbs to the said section. For a transaction to fall under the first limb it is essential that there must be an inextricable link or a back to back transaction in the sale or purchase occasioning such import. And as per second limb of the sec 5(2) the sale can be effected by transfer of documents to the title of goods on arrival of the subject- matter of the transaction. Endorsement of negotiable instrument is necessary before the goods cross the custom frontier of India.