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July 25, 2022

Mixed Supply is defined as two or more individual supplies in conjunction with each other for a single price

by CA Shivam Jaiswal in GST, Legal Court Judgement

Mixed Supply is defined as two or more individual supplies in conjunction with each other for a single price   

Facts and Issues of the case

The applicant Medha Servo Drives are manufacturers of electronics equipments for locomotives and coaches for Indian Railways and Metro Railways. They have submitted that they were issued purchase order from integrated coach factory Chennai for supply of multiple items. Some of these items are manufactured by the applicant and some of them are procured for supply to the coach factory. In the opinion of the applicant majority of the items supplied are taxable at the rate of 18%. The relevant terms of the contract are:

  1. The invoice would contain HSN code for each item indicating GST rates separately.
  2. The payment will be released for complete rake set and not for part supplies

The applicant is desirous of ascertaining whether their supplies made for the above purchase order amounts to composite supply or mixed supply.

Observations by the Court

The Court has gone through the contentions raised by the applicant. The applicant contends that the supply made to M/s Integral Coach Factory is not a mixed supply as the goods and services are supplied at individual price separately but not for a single price. For a supply to be termed as mixed supply, the determining factors are:

  • There should be two or more individual supplies
  • The supplies should be made in Conjunction with each other
  • The supply should be made for a single price by a taxable person
  • Such supply does not constitute a Composite Supply.

In the present case ,the applicant is involved in the supply of ‘design , development , manufacture , supply, testing and commissioning of 152 sets of 25 KV AC microprocessor controlled IGT based 3 phase propulsion system and equipment to rdso specification’.

The price of each set was quoted to be Rs.4, 77, 82,716-00. This price is for design, development, manufacture, supply, testing and commissioning of each set. Each set consists of multiple items including both goods and services which are made in conjunction with each other for a single price of Rs.4, 77, 82,716-00 per set. Some of the items are Main traction converter , TCMS /Multiplexing system , Pneumatic system comprising of main air compressor along with mounting frame ,Set of MCBs , Contactors , relays , inter vehicle couplers , supervision of installation , training of personnel etc.

The IGST rate of tax has been mentioned as 28% and the amount of Rs. 4, 77, 82,716-00 is inclusive of 28% of the IGST.

Price break up doesn’t necessarily imply that the items are being supplied separately for separate prices. Here, though the supplies are capable of being made individually, the essential concomitant of the present agreement is that they should be supplied in conjunction with each other to function as one complete rake set. The schedule of delivery mentions that the entire set is to be delivered at once but not the individual items separately. Even as per terms of payment, payment is done for the entire set and not individual items, implying the supply is being made for single price per unit. Further, this supply cannot be termed a composite supply because the supplies involved are not naturally bundled and only one of the supplies cannot be determined as a principal supply.

Hence, in this case there are two or more individual supplies, supplied in conjunction with each other by a taxable person for a single price, which does not constitute a composite supply. Thereby, the supply satisfies all the pre-requisites to be termed as a “Mixed Supply”. The decisions relied upon by the applicant are distinguishable to the facts of the case on hand. In view of the above discussions, the said supply is held to be a mixed supply.

Conclusion

Two or more individual supplies, supplied in conjunction with each other by a taxable person for a single price is to be termed as a “Mixed Supply”.

In-re-Medha-Servo-Drives-Private-Limited-GST-AAAR-Telangana

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