Goods and Services Tax – GST – By: – RAMESH PRAJAPATI – Dated:- 25-8-2017 Last Replied Date:- 30-8-2017 – Section 8 of the CGST Act 2017 provides that the tax liability on a composite or a mixed supply shall be determined in the following manner, namely:- a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; and a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax. Therefore, it is necessary to understand the composite and principal supply as stated under Section 8. First of all, to know whether it is a new idea introduced in the GST era or it is something old adopted from the Central Excise / Service tax regime. The composite supply is defined under Section 2 (30) of CGST Act 2017 which reads as under: Composite Supply means a supply made by a taxable person to a recipient consisting of two or more taxable sup
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ciples of interpretation of specified descriptions of services or bundled services (1) Unless otherwise specified, reference to a service (herein referred to as main service) shall not include reference to a service which is used for providing main service. (2) Where a service is capable of differential treatment for any purpose based on its description, the most specific description shall be preferred over a more general description. (3) Subject to the provisions of sub-section (2), the taxability of a bundled service shall be determined in the following manner, namely:- (a) if various elements of such service are naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which gives such bundle its essential character; (b) if various elements of such service are not naturally bundled in the ordinary course of business, it shall be treated as provision of the single service which results in highest liability of service tax. Explanation
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the ordinary course of business. Majority of service providers in a particular area of business provide similar bundle of services. For example, bundle of catering on board and transport by air is a bundle offered by a majority of airlines. The nature of the various services in a bundle of services also helps in determining whether the services are bundled in the ordinary course of business. If the nature of services is such that one of the services is the main service and the other services combined with such service are in the nature of incidental or ancillary services which help in better enjoyment of a main service. For example, service of stay in a hotel is often combined with a service or laundering of 3-4 items of clothing free of cost per day. Such service is an ancillary service to the provision of hotel accommodation and the resultant package would be treated as services naturally bundled in the ordinary course of business. The different elements are integral to one overall s
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