Composite Supply & Mixed Supply
There is a thin line of difference between composite and mixed supply. Section 8 of GST Act defines with the composition supply and mixed supply.
Composite Supply is defined in Section 2 (30). As per the section 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 ordinary course of business
- one of which is a principal supply
To give an example of composite supply we can say that:
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;
The tax liability on a composite shall be determined in the following manner. 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 shall be taxable at the rate of Principal Supply.
As per Sec 2 (74) Mixed Supply comprises:
- 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
Example: 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.
To compute the tax liability of mixed supply (comprising two or more supplies), the supply shall be treated as a supply of that particular supply which attracts the highest rate of tax and the highest rate shall be levied on all the articles in that supply. It is immaterial whether or not any of its product is exempt or taxable at less rate.
