Mixed Supply and Composite Supply under GST

“Supply” means all forms of supply of goods/services. It is made for a consideration during the course of business and includes the following-

• Sale
• Transfer
• Barter
• Exchange
• License
• Rental
• Lease
• Disposal
• Import of services for a consideration (if even it is not in the course or furtherance of business)

“Composite supply” means a supply comprises two or more goods/services, which are naturally bundled and supplied in with each other in the ordinary course of business, one of which is a principal supply. The items cannot be supplied separately.

Any supply of goods or services will be treated as composite supply if it fulfills both the following conditions-

• The supply consists of 2 or more goods or services together, and
• It is a natural bundle, i.e., goods or services are usually provided together in normal course of business. They cannot be separated.

• 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.
• A works contracts and restaurant services are classic examples of composite supplies, however the GST Act identifies both as supply of services and chargeable to specific rate of tax mentioned against such services. (Works Contract and Restaurant)
• A hotel provides a package of 4 days and 3 nights with the facility of breakfast. This is a natural bundling of services. The service will be treated as service of providing Hotel Accommodation.
• Discount Offers in Shops- Many shops offer freebies during festivals; say a body soap on the purchase of a shampoo. This is considered a mixed supply as it does not satisfy the second condition, i.e., all of these items can be sold separately. You can buy either just soap or just a shampoo. The highest rate of GST will apply on this transaction. Assuming that shampoos have the higher rate, this rate will apply on the whole mixed bundle.

If the composite supply involves supply of services as principal supply, such composite supply would qualify as supply of services and accordingly the provisions relating to time of supply of services would be applicable. Alternatively, if composite supply involves supply of goods as principal supply, such composite supply would qualify as supply of goods and accordingly, the provisions relating to time of supply of goods would be applicable.

“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;

• 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.
• Booking Train Tickets- If you are booking a Rajdhani train ticket which also includes the meals on the train. This is treated as a bundle of supplies. It is a composite supply where the products cannot be sold separately. You will not buy the meal and the train ticket separately. The transportation of passenger is, therefore, the principal supply. The rate of tax applicable to the principal supply will be charged to the whole composite bundle. Therefore, the rate of GST applicable to the transportation of passengers by rail will be charged by IRCTC on the booking of Rajdhani ticket.

The mixed supply, if involves supply of a service liable to tax at higher rates than any other constituent supplies, such mixed supply would qualify as supply of services and accordingly the provisions relating to time of supply of services would be applicable. Alternatively, the mixed supply, if involves supply of goods liable to tax at higher rates than any other constituent supplies, such mixed supply would qualify as supply of goods and accordingly the provisions relating to time of supply of services would be applicable.