Composite Supply

 COMPOSITE SUPPLY

COMPOSITE SUPPLY

Composite supply means 

• consisting of two or more taxable supplies 

• naturally bundled

• in conjunction with each other

• in the ordinary course of business, 

• one of which is a principal supply.

For e.g. Machinery (supply of goods) provided along with warranty and maintenance contract.

Principal supply – as per Section 2(90) of CGST Act means supply of goods or services which constitutes the predominant element of a composite supply 

“Whether services are bundled in the ordinary course of business 

• Perception of the consumer or the service receiver

• Majority of service providers in the in a particular area of business provide similar bundle of services

• The nature of various services

• Advertised as a single package

• Single Price

• different elements aren’t available separately

• different elements are integral to one overall supply

No straight jacket formula can be laid down to determine whether a service is naturally bundled in the ordinary course of business.

Each case has to be individually examined in the backdrop of several factors.