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TMI BlogNEW CONCEPTS OF SUPPLY IN REVISED GST LAWX X X X Extracts X X X X X X X X Extracts X X X X ..... NEW CONCEPTS OF SUPPLY IN REVISED GST LAW X X X X Extracts X X X X X X X X Extracts X X X X ..... ising two or more supplies of goods or services, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. Illustration given in Revised GST Law: Where goods are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and supply of goods is the principal supply. In simple words, we can say that composite services are those services which are normally provided in combination and are naturally bundled in the ordinary course of business. Another example of composite supply can be construction of residential complex service along with Electrification and Water System Development Services. This is for the reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that no residential complex can be constructed without electrification and water system development. However, presently, the revenue department disputes that electricity and water system development services are liable to service tax at full rate as there is abatement for construction of residential complex service. The introduction of concept of composite supply in GST regime is similar to the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncept of bundled services under Service Tax Laws. MIXED SUPPLY:- Section 2(66) defines this term as "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. Illustration given in Revised GST Law: A supply of a package c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drink 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. This is entirely new concept introduced in GST regime which will cover supplies made together whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther the supplies are related or not. Say for example, bucket supplied with detergent powder or container supplied with bournvita. The mixed supplies can be combination of two supplies whether or not related to each other. As regards taxability of composite or mixed supply is concerned, the provisions are provided in section 3(5) of the Revised GST Law as follows:- The tax liability on a composi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te or a mixed supply shall be determined in the following manner - (a) 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. (b) a mixed supply comprising two or more supplies shall be treated as supply of that particular supply which attracts the highest rate of tax. The above provisions will definitely cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eate disputes and litigation as whether the supply is composite or mixed will be dependent on facts and circumstances of a particular case. Moreover, the revenue department will consider a supply as composite or mixed according to the highest tax criteria. It was hoped that the GST regime would dispense with the classification disputes and lead to lesser litigation but introduction of above concep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts will definitely ignite litigation. PRINCIPAL SUPPLY:- Section 2(78) defines this term as "principal supply" means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary and does not constitute, for the recipient an aim in itself, but a means for better enjoyment of the prin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cipal supply. There is no example given in the revised GST Law for principal supply. However, principal supply will be that supply which is predominant over other supplies. Say for example free wifi services provided during stay in hotel. In this case, the predominant supply is accommodation services and wifi services are provided only for better enjoyment of the principal supply of service. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is same concept of bundled service which is applicable in current service tax regime.
It is hoped that the above concepts do not invite unnecessary litigation in GST regime. X X X X Extracts X X X X X X X X Extracts X X X X
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