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

Which statement correctly distinguishes how Section 8 of the CGST Act treats a mixed supply from a composite supply?

A mixed supply is treated as the supply attracting the highest rate of tax, whereas a composite supply is treated as its principal supply. These are the two separate rules in Section 8(b) and Section 8(a) of the CGST Act.

  1. ABoth are taxed at the highest rate among the supplies
  2. BA mixed supply is taxed as the supply attracting the highest rate, while a composite supply is taxed as its principal supplyCorrect
  3. CA mixed supply is taxed as the principal supply, while a composite supply is taxed at the highest rate
  4. DBoth are taxed separately item by item at their individual rates

Explanation

Section 8(a) makes a composite supply a supply of its principal supply. Section 8(b) makes a mixed supply a supply of that particular supply which attracts the highest rate of tax. Options A and C mix up the two rules and D ignores Section 8.

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