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CMA Intermediate · Direct and Indirect Taxation · Computation of GST Liability

Gupta Foods supplies a mixed combo for Rs 1,20,000 comprising Item P (Rs 50,000, GST 5%), Item Q (Rs 40,000, GST 12%) and Item R (Rs 30,000, GST 18%), sold at a single price without discount. Which statement about the GST liability is correct, and what is the amount?

The liability is Rs 21,600. A mixed supply is treated as the single item attracting the highest rate, here 18 percent, applied to the whole Rs 1,20,000. Splitting by item or averaging the rates is not permitted.

  1. ARs 21,600, as the whole combo is taxed at 18%Correct
  2. BRs 12,200, as each item is taxed at its own rate
  3. CRs 6,000, as the combo is taxed at the lowest rate of 5%
  4. DRs 14,400, as the combo is taxed at the average rate of 12%

Explanation

A mixed supply is treated as the supply attracting the highest rate, which is 18% (Section 8(b)). Tax = 1,20,000 x 18% = Rs 21,600. Taxing items separately gives 2,500+4,800+5,400 = Rs 12,700 (the distractor of Rs 12,200 is also wrong). Taxing separately is not allowed for a mixed supply.

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