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Published on:
March 21, 2023
By
Harshini

Mixed Supply Levy Post GST

Mixed supply refers to the supply of two or more goods or services together in a single transaction. Under the GST regime, mixed supplies are treated differently than composite supplies, which refer to the supply of two or more goods or services together as a single product or service.

In the case of a mixed supply, the GST liability is determined based on the highest rate of tax applicable to any of the goods or services supplied in the mix. This is known as the principle of "dominant nature".

For example, if a supplier sells a package of goods that includes a mobile phone and a case for the phone, and the GST rate on the phone is 12% while the GST rate on the case is 18%, the entire package will be taxed at the higher rate of 18%.

The same principle applies to services as well. If a supplier offers a package of services that includes both taxable and exempt services, the entire package will be considered as a taxable supply if the taxable services are of dominant nature.

It's important to note that in the case of a composite supply, the GST liability is determined based on the rate of tax applicable to the principal supply, which is the main product or service in the supply.

In summary, under the GST regime, mixed supplies are taxed based on the principle of dominant nature, where the highest rate of tax applicable to any of the goods or services in the mix is applied to the entire supply.

Conditions for treating a supply as mixed supply under GST

Under the GST regime, a supply of goods or services is considered a mixed supply if it involves the supply of two or more individual goods or services together as part of a single transaction. For a supply to be treated as a mixed supply, the following conditions must be satisfied:

The supply must involve the supply of two or more goods or services.

The supply must be made in a single transaction.

The individual goods or services being supplied must not be naturally bundled together. In other words, they must be capable of being supplied separately.

The goods or services must be supplied for a single price.

Once a supply is determined to be a mixed supply, the GST liability on the supply is determined based on the highest rate of tax applicable to any of the individual goods or services being supplied. This is known as the principle of "dominant nature". For example, if a supplier sells a package of goods that includes a mobile phone and a case for the phone, and the GST rate on the phone is 12% while the GST rate on the case is 18%, the entire package will be taxed at the higher rate of 18%.

It's important for businesses to correctly identify whether a supply is a mixed supply, as this will determine the applicable GST rate and the associated compliance requirements. Businesses may need to seek professional advice or consult the relevant GST regulations to ensure compliance with the GST law.

Judicial Interpretation related to Mixed Supply under GST

There have been several judicial interpretations related to mixed supply under the GST regime. Some of the notable ones are:

In the case of Satya Developers Private Limited vs. Union of India, the Karnataka High Court held that a bundled supply of goods and services cannot be treated as a mixed supply if the goods and services are naturally bundled together. The court also held that the GST liability on such supplies should be determined based on the principal supply.

In the case of Clay Craft India Private Limited vs. Union of India, the Rajasthan High Court held that the GST liability on a mixed supply should be determined based on the highest rate of tax applicable to any of the goods or services in the supply, even if one of the goods or services is exempt from GST.

In the case of Uber India Systems Private Limited vs. Union of India, the Authority for Advance Rulings (AAR) held that the supply of rides by Uber cannot be treated as a mixed supply, as the supply of transportation services and ancillary services such as payment processing and platform access fees are naturally bundled together. The AAR also held that the GST liability on such supplies should be determined based on the principal supply.

Conclusion

These judicial interpretations provide guidance on how mixed supplies should be treated under the GST law. It's important for businesses to stay up-to-date with the latest court rulings and comply with the applicable GST regulations to avoid any legal or financial consequences.

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Updated on:
March 16, 2024