2026-VIL-194-AAR
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SGST Advance Ruling Authority

GST - Supply of tea along with ancillary items - Composite supply or mixed supply under Section 2(30), Section 2(74) and Section 8 of the CGST Act, 2017 - Applicant, a manufacturer of tea, proposed to pack in a single retail pack various types of tea with items such as a stainless steel spoon, plastic spoon, glass tea cup, wooden honey dipper and plastic honey spoon. The Applicant submitted that there would be a single price, a single invoice and no separate consideration for the item packed with the tea, and that the items were included only to facilitate consumption of tea. Tea attracts GST at 5%. The spoons, cup and plastic honey spoon attract 18% while the wooden honey dipper attracts 5% - Whether the supply of tea along with the said items is a composite supply or a mixed supply, and the rate of tax applicable - HELD - A composite supply requires two or more taxable supplies which are naturally bundled and supplied in conjunction with each other in the ordinary course of business. The indicators of natural bundling are the perception of the customer, the practice of other suppliers in the same line of business, the nature of the supplies, and whether the elements are integral to one overall supply. None of these indicators apply - The customer does not expect such bundling when buying tea, and majority of similar businesses do not bundle such items as a matter of course. The items are not required to enjoy tea, and they are not integral to the overall supply such that their removal would affect its nature. The Applicant itself stated that the items were included to facilitate consumption and to test the market. The supply is therefore not a composite supply - A mixed supply requires that the supply is not a composite supply, that it is for a single price, and that the items can be supplied separately and are not dependent on each other. The tea and the other items are sold separately in the market and are not dependent on each other. All ingredients of a mixed supply are present. Under Section 8(b), a mixed supply is treated as the supply which attracts the highest rate of tax. Tea packed with a spoon, tea cup or plastic honey spoon is taxable at the higher rate of the two items. Tea packed with the wooden honey dipper attracts the same rate for both items - The supply is a mixed supply. It is taxable at 18% where tea is packed with the stainless steel spoon, plastic spoon, glass tea cup or plastic honey spoon, and at 5% where tea is packed with the wooden honey dipper – Ordered accordingly - HSN code to be mentioned in a mixed supply - Section 8(b) of the CGST Act, 2017 - Applicant sought to know the HSN code to be used for the bundled supplies - Whether the HSN code of tea or of the ancillary item is to be mentioned - HELD - In a mixed supply, the supply is treated as that particular supply which attracts the highest rate of tax. The HSN code of that supply is therefore to be mentioned. Where the rate of tax of both the supplies is equal, the CGST Act is silent as to the HSN code. In such instances, the HSN code of any of the supplies in the mixed supply can be mentioned - The HSN code of the supply attracting the highest rate is to be mentioned. Where the rates are the same, the HSN code of any of the supplies can be mentioned.
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