Mixed Supply

 MIXED SUPPLY


MIXED SUPPLY

• A single price is paid for the whole package. and

• The products or services can be sold individually.


MEANING

• Mixed supply means two or more individual supplies of goods or services,

• made in conjunction with each other 

• by a taxable person for a single price 

• supply of which supply attracts the highest rate of tax

• not constitute a composite supply


EXAMPLES

• supply of stationery pack containing crayons, paints, brushes, drawing book etc. 

• boarding school – Education with residence and food.

• UPS supplied with external storage battery 


TIME OF SUPPLY

• supply of service is taxed at higher rate amongst others 

• accordingly relevant provisions related to time of supply of services shall be considered into account. 

How to break the deadlock

Value of the constituent

Often people want to decide on the basis of the value of each constituent. This, however, could be treading on a slippery surface. Should a vendor say that just because a constituent item has a value of 51 percent, it should be considered a principal supply? Moreover, it is often difficult to find out the value of constituent supplies and may be much more difficult to substantiate to a tax officer.

Intention of the supplier and recipient

This could be a better test as it would reveal what the supplier intended to supply, and what the buyer intended to buy. This would also explain the economic rationale behind the supply. A supply should not be artificially split or combined if the economic rationale does not warrant that.

Description on the invoice

The invoice may throw some light on the nature of the transaction. A mixed supply will always have a single value, while a composite supply may or may not. Segregated supply will always have a separate value for each constituent.

Industry practice

One may also look at different practices followed in the industry to reach a conclusion: One airline may include the cost of food in the price of the ticket (composite supply with air transport as a principal supply). The other may charge separately for the food (segregated supply of air transport and food).

Break open a transaction

It may also make sense to imagine splitting the transaction into separate parts to see if it offers any clues. Let’s take an example of an artisan making jewellery out of gold provided by the jeweller on job-work-charges basis. This is simply a service. However, in the course of making the jewellery, the artisan required some additional gold that he selected from his own inventory. While the principal supply appears to be that of service, the value of gold would always be substantially higher than the value of service. Would this make gold the principal supply? To find an answer, we can split the transaction into two parts: 1. The artisan first sells the additional gold to the jeweller. 2. The artisan then takes that gold back and works on the same so that it then looks like a segregated supply of goods and of service.


Comments

Post a Comment

Popular posts from this blog

Understanding E-commerce Operators under GST

Image
Understanding E-commerce Operators under GST In the rapidly evolving world of online commerce, electronic marketplaces have become instrumental in facilitating seamless transactions between buyers and sellers. With the advent of E-commerce, governments worldwide have been adapting their tax systems to keep pace with the digital economy. In India, the GST was introduced on July 1, 2017, and it brought about significant changes for E-commerce operators.  What is an E-commerce Operator? An E-commerce operator refers to any person or entity that owns, operates, or manages a digital platform that facilitates the supply of goods or services between suppliers and customers. Popular E-commerce platforms like MDND, Amazon, Flipkart, and eBay are classic examples of E-commerce operators. These operators act as intermediaries, bringing sellers and buyers together and facilitating transactions. GST Registration of E-commerce Operator E-commerce operators are required to register under GST, reg...
Read more

GST Reconciliation

Image
GST Reconciliation GST reconciliation stands as a pivotal task for businesses across India, regardless of their scale.  This critical process involves cross-checking GST data extracted from various sources like invoices, purchase orders, and bank statements to guarantee its precision and entirety.  The intricacies of this task often make it time-consuming, particularly for enterprises dealing with high transaction volumes. However, despite its complexities, GST reconciliation remains indispensable. Compliance with GST regulations hinges on this process, crucial for evading substantial penalties.  Moreover, it enables businesses to maintain an accurate financial trail, identifying potential errors or discrepancies along the way. A Proper Explanation of GST Reconciliation GST reconciliation process serves to pinpoint errors or omissions, allowing for timely rectification. The primary objective is to ensure consistency between your recorded invoices and purchases and the dat...
Read more

Credit notes and debit notes under GST

Image
Credit notes and debit notes under GST Section 34 of the CGST Act plays a crucial role in regulating credit and debit notes in the context of goods and services. Section 34: Credit and debit note Section 34(1) of the CGST Act pertains to credit and debit notes. The extract of the section is provided below: “Where one or more tax invoices have been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient, the registered person, who has supplied such goods or services or both, may issue to the recipient one or more credit notes for supplies made in a financial year containing such particulars as may be prescribed.” According to the section 34, a supplier has the option to issue a credit note with GST (referred to as “GST credit note”...
Read more