COMPOSITE SUPPLY VIS-À-VIS MIXED SUPPLY
By: – DR.MARIAPPAN GOVINDARAJAN
Goods and Services Tax – GST
Dated:- 19-6-2018
Composite supply
Section 2(30) of Central Goods and Services Tax Act, 2017 defines the expression 'composite supply' as a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply.
One illustration is given in the Act to the definition of composite supply. Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply.
Mixed supply
Section 2(74) defines the expression 'mixed supply' as two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other
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ovides uniform tax treatment under GST for such supplies.
Tax rate
The rates for both supplies are to be determined as follows-
* In respect of composite supply the principal item is to be taken for the purpose of tax.The tax rate applicable in respect of composite supply the tax rate of principal item is to be taken;
* In respect of mixed supply the item with highest rate is to taken for the purpose of tax.The tax rate applicable in respect of mixed supply is the highest rate of all the items is to be taken.
Advance Ruling
In Re 'Switching Avo Electro Power Limited' – 2018 (4) TMI 810 – AUTHORITY FOR ADVANCE RULING , WEST BENGAL the applicant is a supplier of power solutions including UPS, servo stabilizer, batteries etc., The applicant wants a ruling on the classification of the supply when it supplies UPS along with the battery. The applicant wanted a more specific ruling whether such supplies could be treated as composite supply.
The Authority observed that the batteries a
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s, super capacitors or fly wheels. The on-battery runtime of most UPS is relatively short but sufficient to start a standby power source or properly shut down the protected equipment. A UPS is typically used to protect hardware or other electrical equipment where an unexpected power disruption could cause injuries of data loss.
The Authority further observed that the UPS serves no purpose if the battery is not supplied or removed It cannot function as a UPS unless the battery is attached. It is needed to be considered whether or not these two items are 'naturally bundled'. The illustration to section 2(30) of the Act refers to a supply where the ancillary supplies are inseparable from the principal supply and form an integral part of the composite supply. Note 3 to Section XVI of the Tariff Act refers to a composite machine as the one consisting of two or more machines fitted together to form a whole. When a UPS is supplied with built in batteries so that supply of the battery is inse
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