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A. Statutory Provision

Section 8 of GST Act provides for determination of tax liability in respect of composite and mixed supply.       

B. Definition

Composite Supply - Section 2(30) defines composite supply as follows:

(30) 'composite supply' means 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;

Where principle supply means:

(90) 'principal supply' means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary;

Illustration: 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.

It is evident from the  above definition that composite supply is a combination of principal supply and other supply of taxable goods or services are both.

Composite supply refers to a single supply, but it has more than one component. The supplier has obligation to supply more than one item. The other components of composite supply can be an integral part of the supply, incidental to main supply or naturally bundled.

The components of supply which are essential to the supply as a whole is considered as an integral part. If the other components of supply are integrally attached to the main supply, then the other component will not be considered as a separate supply.

As per section 8 of the GST Act, the tax applicable to principle supply will be applicable to entire supply.

2. Mixed Supply

Section 2(74) defines mixed supply as follows:

(74) 'mixed supply' means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply.

Illustration: A supply of a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks and fruit juices when supplied for a single price is a mixed supply. Each of these items can be supplied separately and is not dependent on any other. It shall not be a mixed supply if these items are supplied separately;

The mixed supply refers to multiple supply whose components are either of mixed liability that is they attract different rate of GST. The individual components are not integral to each other and not dependent on each other. Therefore, the individual component is considered as a separate supply. But the supplier charges a single price for all the supplies made.

As per section 8 of the GST Act, the tax applicable to individual supply in a mixed supply   attracting highest rate of tax will be applicable to single price charged for mixed supply.

For explanation with examples please see the attached video.


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CA Somil
Category GST   Report

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