GST Composite Supply with Examples

Introduction
How is composite supply defined under GST Act
Examples of composite supply in GST
Mixed supply – A riddle bin understanding GST composite supply
How to determine whether the supply is composite or mixed supply in GST
Composite supply examples: From the reading of circulars issued by CBEC
Formulae to bifurcate GST composite supply from a mixed supply

Introduction

Supplies of Goods and Services are clearly defined under GST, similarly the rates and place of Supply rules for each and every goods/services is finalised.

But in general business practices, all supplies will be not be such simple and clearly identifiable supplies. Where many of the supplies may be a combination of goods or combination of services or combination of goods and services both.

There fore, the GST Law identifies GST composite supply and mixed supply and provides certainty in respect of tax treatment under GST for such supplies.

How is composite supply defined under GST Act

GST Composite supply means 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 conjunction with each other in the ordinary course of business,
one of which is a principal supply.

A principal supply on the other hand is defined as any supply which consists of goods or services and which constitutes the predominant element of a composite supply to which any other supply forming part of that composite supply is ancillary

Examples of composite supply in GST

Goods are packed/repacked, loaded/unloaded, staked/re-staked and transported/ transshipped with insurance
Booking a Rajdhani train ticket which includes meal and insurance also,
A works contract: It is a classic example of composite supply
Eatery business provides a bundled supply of preparation of food and serving the same

Mixed supply – A riddle bin understanding GST composite supply

A 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 consideration and where such supply does not constitute a composite supply.

For Example : 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.

Here are some more examples of mixed supply in GST :

A Diwali gift box consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drink and fruit juices supplied for a single price is a mixed supply,
a free bucket with detergent powder
Portable water with Food in restaurants

How to determine whether the supply is composite or mixed supply in GST

Rule out that the supply is a composite supply
A supply can be a mixed supply only if it is not a composite supply
If the items can be sold separately, i.e., the supplies not naturally bundled in the ordinary course of business, then it would be a mixed supply
Once the amenability of the transaction as a composite supply is ruled out, it would be a mixed supply, classified in terms of a supply of goods or services attracting highest rate of tax

Composite supply examples: From the reading of circulars issued by CBEC

Circular no.11/11/2017-GST dated 20.10.2017	*Supply of books, pamphlets, brochures, envelopes, annual reports, leaflets, cartons, boxes etc.* Printed with logo, design, name, address or other contents supplied by the recipient of such printed goods, Analysis : The following supply is a good example of composite supply in GST and the question, whether such supplies constitute supply of goods or services would be determined on the basis of what constitutes the principal supply
	*In the case of printing of books, pamphlets, brochures, annual reports, and the like,* Where only content is supplied by the publisher or the person who owns the usage rights to the intangible inputs, While the physical inputs including paper used for printing belong to the printer In the given case, supply of printing [ of the content supplied by the recipient of supply] is the principal supply and therefore such supplies would constitute supply of services and the GST rate for composite supply in the given case would be 12%
	*In case of supply of printed envelopes, letter cards, printed boxes, tissues, napkins, wall paper etc. printed with design, logo etc.* Supplied by the recipient of goods But made using physical inputs including paper belonging to the printer Predominant supply is that of goods and the supply of printing of the content [supplied by the recipient of supply] is ancillary to the principal supply of goods and therefore such supplies would constitute supply of goods.
Supply of UPS with battery is a mixed supply under GST Act	It is rightful to say, the UPS serves no purpose if the battery is not supplied along with it. The UPS being the principal supply in this bundle we can call the supply as composite supply But on the other hand we also cannot negate the fact that a person can purchase a standalone UPS and a battery from different vendors. Therefore the going by the definition, supply of UPS and Battery is to be considered as Mixed Supply under Goods and Service Tax Act, as they are supplied under a single contract at a combined single price.