[Opinion] Enabling provision to split GST composite supply & not compromise the same
- Blog|News|GST & Customs|
- 2 Min Read
- By Taxmann
- |
- Last Updated on 27 January, 2023
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Over the years, the government has made attempts to split composite supply, sans an enabling provision. The fate of few such attempts has already been sealed by the Supreme Court/High Courts, by holding it as being against the original thought behind the concept of composite supply. However, we continue to witness efforts of unbundling composite supply without any attempt to make suitable changes to the legislation first – as they say, ‘old habits die hard’.
Advent and meaning of composite supply
The legislature had retained the concept of bundled services as per the erstwhile Service Tax regime under the GST regime, as composite supply and broadened its scope to include supply of goods as well. Composite supply consists of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other, in the ordinary course of business, one being a principal supply.
Principal supply constitutes the predominant element of a composite supply and to which any other supply, forming part of that composite supply, is ancillary. In case of a composite supply, GST is payable at the rate of tax applicable on the principal supply.
Some examples of composite and principal supplies:
- Supply of goods packed and transported with insurance is composite supply and supply of goods is a principal supply.
- A hotel provides a stay package with the facility of breakfast. This is a natural bundling of services. The service will be treated as service of providing hotel accommodation.
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