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CMA Intermediate · Direct and Indirect Taxation · Concept of Supply including Composite and Mixed Supplies

Ananya Foods, Pune, sells a gift pack for Rs 1,000 containing chocolates (GST 18%), dry fruits (GST 12%) and a steel bottle (GST 18%), each sold individually as well and combined without any one being the principal item. Under section 8, how is the GST liability on the pack determined?

The gift pack is a mixed supply, so it is taxed at the rate of the item attracting the highest rate, which is 18%. Section 8(b) requires this, rather than separate taxation, the lowest rate or an average rate.

  1. AEach item is taxed at its own rate separately
  2. BTax at 12%, the lowest rate, as it benefits the buyer
  3. CTax at 18%, the highest rate among the items, as a mixed supplyCorrect
  4. DTax at the average rate of 16%

Explanation

A pack of individually supplied items for a single price without a principal supply is a mixed supply. Section 8(b) taxes a mixed supply at the rate of the particular supply attracting the highest rate, which is 18%. Taxing at the lowest or average rate is not provided.

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