Introduction:

In the realm of GST, the intriguing concepts of mixed supply and composite supply have emerged, addressing the complexities of supplies that are made together, regardless of their relation. To grasp their importance, one must explore their definitions and implications.

Supply, within GST, refers to the provision of goods or services for consideration, in the course of business, encompassing activities like sale, transfer, barter, exchange, license, rental, lease, disposal, and import of services for consideration. Some activities highlighted in Schedule I of the GST Act are also seen as supply.

So, why distinguish between mixed supply and composite supply? The GST Council dictates specific rates for distinct goods and services which decisively influence the applicable tax. There are instances where goods and services are supplied together, though not inherently linked, such as an air conditioner's supply with installation services. Here, the GST Act offers guidance on rating such supplies, bringing mixed supply and composite supply concepts into the picture, aiding in determining the right GST rate and ensuring uniform tax treatment.

Let’s first review bundled supply. It signifies a mix of goods and/or services, a notion common in the service tax regime, signifying a mix of two or more services. To ascertain if a supply is naturally bundled, consider: if buyers expect certain services packaged; or if businesses frequently offer service packages, hinting naturally bundled supply. Also, main services with subsidiary services qualify as bundled. However, lacking these does not negate bundling.

Now, let's dig into composite supply. It refers to two or more goods or services, typically sold together with one being the principal, bundled naturally in business but not separately offered. To qualify, two criteria are met: supply of two or more goods/services together and these being inseparable in the business routine. Composite supply’s tax rate matches the principal supply.

Conversely, mixed supply involves a combination of goods/services sold together for one price, each capable of standalone sale, independent of others. Mixed supply’s tax aligns with the item bearing the highest rate.

To differentiate, exclude composite supply; if items sell separately, not bundled in routine, it’s mixed. For example, purchasing canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks, and fruit juices separately rather than in a Diwali box doesn’t constitute mixed supply, hence, each is taxed separately.

Thus, differentiating between mixed and composite supply is pivotal for determining GST rate and correct tax treatment. Understanding these helps businesses maneuver GST’s complexities efficiently and legally.

Note: The examples are illustrative, not comprehensive.