9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (1) TMI 493 - AAR - GSTClassification of supply - composite supply or mixed supply? - trading activity of Grated Supari, Lime and Tobacco by putting them together in a transparent plastic pouch for the sake of easy carry by the customer - whether the delivery of the 3 items Grated Supari, Lime and Tobacco put together in a transparent plastic pouch by the applicant for the sake of easy carry by the customer will be treated as mixed supply or otherwise? - HELD THAT - Gutkha, which in itself is a combination of grated supari, slaked lime, chewing tobacco and some other flavouring ingredients is similar in nature to the combination mentioned hereinabove. Gutkha is an item which is easily available in the open market, is widely popular across the country and consumed by crores of people across the length and breadth of India. Thus, it can be said that the combination formed by mixing required proportions of grated supari and slaked lime with chewing tobacco results in a product similar in nature to gutkha (without the sweet or savoury flavourings). Further, even when an individual goes to a pan shop and asks for the above combination known popularly as mawa in Gujarat, the pan shop owner will give the 3 items i.e. grated supari, slaked lime and chewing tobacco separately so as to enable the person to mix them as per his requirement before consuming it. We also find that the precise reason why the applicant wants to supply the above 3 items in a single transparent plastic pouch, although packed separately and charged itemwise, to the customers, is to enable them to mix these items as per the required proportion before consuming it. Thus, it can be concluded that the 3 items mentioned above are naturally bundled and supplied in conjunction with each other in the ordinary course of business and this combination is nothing but a composite supply of goods, wherein chewing tobacco is the principal supply. 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. However, as discussed earlier and admitted by the applicant himself, the aforementioned combination of 3 items is not sold for a single price i.e. each of these items are shown separately in the invoice and separate prices are charged for each item. Also as discussed earlier in para 10.3, since the aforementioned combination constitutes a composite supply of goods, wherein chewing tobacco is the principal supply, it can be safely concluded that the aforementioned combination is not a mixed supply of goods. Also, in view of Section 8(a) of CGST Act, it can be seen that a composite supply comprising of two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply. Therefore, in the instant case, since chewing tobacco is the principal supply in the composite supply of goods, the said composite supply of goods would be treated as a supply of chewing tobacco falling under Tariff Item 24039910 of the First Schedule to the Customs Tariff Act, 1975 (1 of 1975). The same appears at Sr.No.15 of Schedule-IV of the Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 on which GST liability is 28% - The said product also appears at Sr.No.26 of Notification No.01/2017- Compensation Cess (Rate) dated 28.06.2017 issued under the CGST Act, 2017 under which a Compensation Cess of 160% is leviable on it. Also, as per Section 136 of the Finance Act, 2001, a National Calamity Contingent Duty (NCCD) of 10% is leviable on chewing tobacco as per the Seventh Schedule to the Finance Act, 2001.
Issues Involved
1. Classification of the delivery of grated supari, lime, and chewing tobacco in a single pouch as mixed supply or composite supply under the CGST Act, 2017. 2. Determination of the applicable tax rate for the supply of these items. Issue-wise Detailed Analysis 1. Classification of the Delivery of Grated Supari, Lime, and Chewing Tobacco The applicant, an unregistered person in GST, intends to trade grated supari, lime, and chewing tobacco, each packed separately but delivered together in a transparent plastic pouch. The applicant argues that since each item is priced and invoiced separately, the supply should not be classified as a mixed supply under Section 2(74) of the CGST Act, 2017. Discussion & Findings: - Composite Supply Definition: As per Section 2(30) of the CGST Act, 2017, a composite supply consists of two or more taxable supplies of goods or services that are naturally bundled and supplied in conjunction with each other, with one being the principal supply. - Mixed Supply Definition: Section 2(74) of the CGST Act, 2017 defines mixed supply as two or more individual supplies of goods or services made together for a single price that does not constitute a composite supply. Analysis: The applicant supplies grated supari, lime, and chewing tobacco together in a single pouch for customer convenience, with each item separately priced and invoiced. The applicant claims this does not constitute a mixed supply. However, the authority finds that these items are typically consumed together, mixed before consumption, and are naturally bundled in the ordinary course of business. Examples include 'mawa' in Gujarat and 'khaini' in other regions, where chewing tobacco is the principal ingredient mixed with supari and lime. Conclusion: The authority concludes that the supply of grated supari, lime, and chewing tobacco in a single pouch is a composite supply under Section 2(30) of the CGST Act, 2017, with chewing tobacco being the principal supply. 2. Determination of Applicable Tax Rate Classification of Individual Items: - Grated Supari: Classified under Sub-heading No.08028030 as per the Customs Tariff Act, 1975, with a GST rate of 5% (2.5% CGST + 2.5% SGST). - Chewing Tobacco: Classified under Sub-heading No.24039910, with a GST rate of 28% (14% CGST + 14% SGST) and a compensation cess of 160%. Additionally, a National Calamity Contingent Duty (NCCD) of 10% is applicable. - Slaked Lime: Classified under Sub-heading No.25222000, with a GST rate of 5% (2.5% CGST + 2.5% SGST). Tax Liability on Composite Supply: As per Section 8(a) of the CGST Act, 2017, the tax liability on a composite supply is determined by the principal supply. Since chewing tobacco is the principal supply, the entire composite supply will be treated as a supply of chewing tobacco. Applicable Tax Rates: - GST Rate: 28% (14% CGST + 14% SGST) as per Sr.No.15 of Schedule-IV of Notification No.01/2017-Central Tax (Rate) dated 28.06.2017. - Compensation Cess: 160% as per Sr.No.26 of Notification No.01/2017-Compensation Cess (Rate) dated 28.06.2017. - NCCD: 10% as per Section 136 of the Finance Act, 2001. Ruling The delivery of grated supari, lime, and chewing tobacco in a single transparent plastic pouch is classified as a composite supply with chewing tobacco as the principal supply. The applicable tax rates are: - GST: 28% (14% CGST + 14% SGST). - Compensation Cess: 160%. - NCCD: 10%. This ruling ensures that the supply is taxed at the rate applicable to the principal supply, which is chewing tobacco.
|
