Page 32 - GSTL_14th May 2020_Vol 36_Part 2

J32 GST LAW TIMES [ Vol. 36

COMPOSITE SUPPLY AND MIXED SUPPLY

By
Rachit Agarwal
CHARTERED ACCOUNTANT

The concept of composite supply and mixed sup-
ply under GST is similar to the concept of naturally bun-
dled services prevailing in the existing Service Tax re-
gime. The provisions are elaborated herein.
Legal provision under Service Tax
Section 66F(3) of the Finance Act, 1994 -
(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 provi-
sion 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 provi-
sion of the single service which results in highest liability of
service tax.
Explanation. - For the purposes of sub-section (3), the expression “bundled
service” means a bundle of provision of various services wherein an element
of provision of one service is combined with an element or elements of provi-
sion of any other service or services.
Clause (a) of the above provision refers to the Composite Supply and Clause (b)
refers to the Mixed Supply.
Legal provision under GST
A composite supply would mean 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 con-
junction with each other in the ordinary course of business, one of which is a
principal supply.
Following can be absorbed
(1) There must be two or more taxable supplies
(2) Two or more supplies must be naturally bundled
(3) Supply must be in conjunction with each other
(4) Supply must be in the ordinary course of business
(5) One of the Supply is Principal Supply
Meaning of Principal Supply - Section 2(90)
“principal supply” means the supply of goods or services which constitutes
the predominant element of a composite supply and to which any other sup-
ply forming part of that composite supply is ancillary;

GST LAW TIMES  14th May 2020  32