Indian Company namely purchases goods from outside India. Company ‘B’ purchases on high seas sale from company “A” and sells to 3rd company outside India there itself. The goods never arrive in India. Since company ‘A’ of Indian origin purchases in US Dollar and since Company ‘B’ also an Indian Company purchases on high sea sale from Company ‘A’, the payment by company ‘B’ to company ‘A’ should be in US dollar as company ‘A’ has purchased in US dollar. Company ‘B’ will sell the goods outside India in to a 3rd country and proceeds received by company in US Dollar. Both the comopany ‘A’ & ‘B’ have value addition.
Please confirm this is in order.
Back-to-Back High Seas Sales Valid: No VAT for Companies A & B, Transactions in USD and Outside Jurisdiction An Indian company, Company 'A', purchases goods from outside India in US dollars and sells them on a high seas sale to another Indian company, Company 'B'. Company 'B' then sells the goods to a third company outside India, with all transactions occurring while the goods are still on high seas and payments made in US dollars. The forum discussion confirms that this back-to-back transaction is in order, noting that Company 'A' records value addition in its books, while Company 'B' does not, and no state VAT is applicable as the transactions occur outside Indian jurisdiction. (AI Summary)
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