EXAMPLE-77
Compute whether the supply is composite and mixed supply and taxability under GST.
(i)
A hotel in Delhi provides a 3 days and 2 night package with
breakfast and laundering service of 3 clothes per day as free.
(ii)
Renting of commercial building with all amenities (furniture,
AC etc. established in office) for business.
(iii)
A
combo of readymade shirt and unstitched trouser cloth and a watch is supplied
for Rs. 12000. The readymade cloth say taxable @ 18% and cloth material say 12%
and watches @ 28%.
(iv) Booking of Air ticket with facility of food on board.
Answer
Composite
supply according to section 2(30) means a supply comprising two or more goods/services, which are naturally
bundled and supplied with each other in the ordinary course of business, one of
which is a principal supply. The items cannot be supplied separately.
Whereas
mixed supply according to section 2(74) under GST means two or more individual supplies of goods or
services, or any combination, made together with each other by a taxable person
for a single price. Each of these items can be supplied separately and none is
dependent on any other and there is no principal supply.
Taxability
under GST on composite and mixed supply.
In
composite supply:- supply is treated
as supply of principal supply and rate of taxation is determined according to
the rate applicable on principal supply.
In
Mixed supply:- it is deemed as
supply of a particular supply that attracts highest tax rate.
(i) Accommodation service provided with the free breakfast service and laundry service is composite supply because these are naturally bundled and principal supply is renting of hotel. Tax rate of renting of hotel shall be applicable as per the rates based upon rent classification given in Tariff heading of Accommodation service.
(ii)
This
supply is naturally bundled and renting of immovable property is the principal
supply. There is another supply of right to use of goods like furniture etc.
but tax rate of renting of immovable property will be applicable.
(iii)
Here
the combo pack is considered as mixed supply and will be taxable @ 28% at the
highest rate applicable to watch.
(iv)
It
is a composite supply where the products cannot be sold separately. You will not
buy just the meal and not the air ticket. The transportation of passenger is,
therefore, the principal supply. Thus, tax liability under GST is the rate of
tax of supply relating to transportation of passengers by air.