Question3: Please assist in following matters:

1. High Sea sale where considered for GST point of view whether exempt or nil rated or non gst outward supply or not considered as supply'

2. Free sample to customers whether considered under supply or not ' if not a supply then input tax credit related to free sample reverse or not'

Answer: What is high sea sale'

If a buyer wants to sell his goods/consignment to a third party before arrival of goods in territorial jurisdiction of importing country but after sailing of vessel from load port such sale is known as high sea sale. In other words ownership of goods is transferred when the goods are in transit. According to Preamble of the GST Act, it is applicable to the whole of India i.e. it will become applicable after the goods enter territorial jurisdiction of India. In high sea sale, as the sale takes place before goods enter territorial jurisdiction of India, the law of GST is not applicable. The said law will apply to the buyer of goods at high sea who will ultimately file Bill of Entry to import the goods into India and at the time of import he will have to discharge applicable Customs duty and Integrated tax. So it will not come under exempt or nil sale the information to be given in return.

2 - Free sample to customers whether considered under supply or not' If not a supply, then input tax credit related to free sample reverse or not'

As per section 7 of CGST Act, Any supply without consideration is not covered under GST but Schedule I contains list of certain supplies which are to be considered as supply even if made without consideration. Clause 2, Schedule I contains as follows: Provided that the gift not exceeding 50000 rs in value in a financial year by an employer to an employee shall not be treated as supply of goods or services or both. As per above provisions, gifts not exceeding 50000 rs will not be included in supply. Now the question is if the value of gift is more than 50000 rs then how GST should be applied .Suppose A TV of 55000 rs is given to an employee, In our opinion ,the total value should be taxed. It is not that 5000 (55000-50000) is taxable amount. and in this case ITC will be available In case the gift is not covered under GST,as per above provisions the ITC as per section 17(5)(h) i.e. goods lost, stolen, destroyed, written off or disposed off by way of gift or free samples shall not be allowed. Further if the gift is given to the related person the same will be taxed as per clause 1 of schdule1 and valuation will be as per GST rules (Reply dt. 04/10/2017)