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Unravelling Tax Liability on Composite and Mixed Supplies in Indian Taxation Law


In the dynamic landscape of Indian taxation law, understanding the tax liability on composite and mixed supplies is of paramount importance. The inception of the Goods and Services Tax (GST) regime in 2017 has brought significant changes in the way tax liabilities are handled, particularly for composite and mixed supplies. Under the GST, these categories were introduced to address the complexity of tax liability where multiple goods or services are bundled and supplied together.

Defining Composite and Mixed Supplies

Before delving into tax liabilities, it's crucial to comprehend what composite and mixed supplies signify.

  1. Composite Supply: Defined under Section 2(30) of the Central Goods and Service Tax (CGST) Act, 2017, a composite supply refers to a supply made up of two or more taxable supplies of goods or services or both, which are bundled and supplied together with one of them being a principal supply. The principal supply is the predominant element, and other supplies are ancillary.

  2. Mixed Supply: As per Section 2(74) of the CGST Act, 2017, a mixed supply means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other for a single price, where such supply does not constitute a composite supply.

Tax Liability on Composite Supplies

The tax liability on composite supplies is determined based on the principal supply, regardless of other components within the bundle. As stipulated by Section 8(a) of the CGST Act, the composite supply is treated as a supply of the principal supply. This effectively means the tax rate of the principal supply governs the whole composite supply.

For example, consider a travel package that includes transport (principal supply), accommodation, and meals. The entire package will be taxed at the rate applicable to the transport service.

Case Laws on Composite Supplies

In the case of 'Principal Commissioner of Central Excise, Delhi vs. M/s Bhayana Builders (P) Ltd and Others,' the Supreme Court of India, held that service tax is only applicable to the services component and not on the goods portion in a composite contract. This case law forms the basis of tax liability determination in composite supplies.

Tax Liability on Mixed Supplies

The tax liability of mixed supplies is quite different. As per Section 8(b) of the CGST Act, mixed supplies comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax.

For example, a gift box containing chocolates (5% GST) and a perfume (18% GST) sold for a single price would be considered a mixed supply. The tax rate for the entire gift box will be 18%, the rate for the highest taxed item in the box.

Case Laws on Mixed Supplies

The case of 'M/s Calcutta Club Limited vs. The Assistant Commissioner of Commercial Taxes and Others' provides guidance on the tax treatment of mixed supplies. The Supreme Court held that mixed supply means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other for a single price. The highest tax rate among the goods/services will be applied to the entire supply.


In a nutshell, tax liability on composite and mixed supplies under Indian taxation law is a vital concept for businesses offering multiple goods or services bundled together. For composite supplies, the tax rate of the principal supply is applied, while for mixed supplies, the highest rate among the combined supplies is imposed. Understanding these tax treatments helps businesses accurately calculate their tax liabilities and ensure compliance with GST laws.

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