Tax on Inbond sales-reg

[N Balachandran]

Sir,

We are Chennai based company and received the order from Customer who is located in Karnataka for supply of goods to be procured from outside India. The condition given by Customer is this goods are eligible for import under Project imports against the project authority Certificate to be issued by them.

We plan to import goods against their order and keep it in the bonded warehouse by filing Warehouse Bill of Entry in our Name and subsequent selling to Customer from Bondedwarehouse.

The Customer will file the Ex bond bill of entry in their name and get it assessed on the value of Foreign Supplier.

We will raise the commercial invoice on Customer for the value at least 25% higher than the Foreign vendor value.

In the above situation , i would like to seek your expert opinion on the following:

1. Will the sale qualify for sales tax exemption under section 5(2) of CST act?

2. Will attract any Sales tax or not?

3. Duty Assessed on the value of Foreign supplier is Correct as per the customs valuation rules

4. Commercial invoice being raised on Customer with higher value than the imported value is acceptable

I shall be thankful if you could kindly clarify the above with relevant provisions and judgement pl

Regards

N.Balachandran

AI Summary

Company's Import Sale May Not Qualify for CST Exemption; Customs Duty Applies Per Ex-Bond Bill of Entry (2) A company in Chennai plans to import goods for a customer in Karnataka, storing them in a bonded warehouse before selling them at a markup. The company seeks advice on whether this sale qualifies for sales tax exemption under section 5(2) of the CST Act, the applicability of sales tax, customs duty assessment, and the acceptability of invoicing at a higher value. A respondent clarifies that customs duty must be paid based on the ex-bond bill of entry, referencing sections of the Customs Act. They suggest the sale may not be exempt from CST/VAT, advising a detailed review of the purchase agreement.