Composite Supply means supply made by taxable person to receipent
- Consist of two or more supplies of goods or services
- Naturally bundled i.e., goods or services are usually provided together in the normal course of business.
- One of which is principal supply
Tax liability shall be rate of principal supply
(b) Mixed supply means supply made by taxable person to receipent
– combination of goods and services for a single price
– Supplies are not bundled due to natural necessities
– can be supplied individually in the ordinary course of business.
Tax liability shall be the rate applicable to the supply that attracts highest rate of tax
Example on Composite Supply and Mixed Supply
Example-1: 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 the principal supply.
The entire supply will be treated as supply of principal and the rate of tax of principal will apply for other items.
In case of purchase of ticket in Rajdhani Train where the cost of ticket includes the services for Transportation of passengers, cost of foods and supply of bed rolls. All these services are bundled together and here the principal supply will be transportation of passengers.
A Five-star hotel provides four days and three-night package, with breakfast. This is a composite supply as the package of accommodation facilities and breakfast is a natural combination in the ordinary course of business for a hotel. In this case, the hotel accommodation is the principal supply, and breakfast is ancillary to the hotel accommodation.
The hotel accommodation attracts 18% tax and the restaurant service attracts 28% tax. As per the example, hotel accommodation is the principal supply, and the entire supply will be taxed at 18%.
Let us suppose a supply of package consisting of canned foods, sweets, chocolates, cakes, dry fruits, and fruit juice when supplied for a single price.
Here it is further assumed that canned food is taxable @ 12%, sweets at zero rate, chocolates @ 18%, cakes 18%, dry fruits 18%, and fruit juice @ 28%.
Here the Highest rate will be charged @ 28 % on entire value of supply.
If these items are supplied separately then it will not be a mixed supply.
Let us take another example :
A combo pack for Rs 10,000 is supplied which consist of a shirt, watch, wallet, book .
Tax rate for a shirt, watch, wallet and book are 12%, 18%, 5% and Nil respectively. Here the combo pack will be considered as Mixed supply and will be taxable at highest rate which is 18% .