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CA Intermediate · Taxation · Supply under GST

Kapoor Enterprises, Delhi, supplies to Gupta Pvt Ltd., Delhi, a machine with installation. Which of the following activities is a composite supply?

Sale of a machine together with its installation is a composite supply. The two supplies are naturally bundled in the ordinary course of business and the machine is the principal supply, so the whole is taxed at the rate applicable to the machine.

  1. ASale of a machine and, separately, an unrelated consultancy contract on the same invoice
  2. BSale of a machine with installation, where installation is naturally bundled and the machine is the principal supplyCorrect
  3. CA hamper of unrelated gifts sold at one price where the customer may choose items
  4. DSale of a machine and a separate annual maintenance contract at different prices

Explanation

A composite supply consists of two or more supplies naturally bundled in the ordinary course of business, one being the principal supply. Machine plus installation fits this. Unrelated or separately priced supplies are not naturally bundled, so they are not composite.

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