Concept of Combined Supply and Impact of change in Rate of Tax
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Entire supply is made for a single price. Question arises, how the rate of tax shall be decided in such cases? It cannot be different rates for individual supply items, otherwise another problem may arise with respect to bifurcation of value. Entire value has to be charged at single rate of GST i.e. entire together supply shall be subject to single classification.
The mentioned situation is well envisaged and provided for in the GST law.
This combined supply has to be classified either as composite supply or mixed supply and then final classification for rate of tax shall be arrived by virtue of section 8.
The provisions are as under :
Sec 2(30) "composite supply" means a supply made by a taxable person to a recipient consisting 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 of which is a principal supply.
Example : where books are packed and transported with insurance, the supply of goods, packing materials, transport and insurance is a composite supply and supply of goods is a principal supply
Sec 2(74) “mixed supply" means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply.
Section 8 - Tax liability on composite and mixed supplies
The tax liability on a composite or a mixed supply shall be determined in the following manner, namel:
- a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; and
- a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax.
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Another important situation arises when the rate of GST changes in between anytime during the year. Such situation arose multiple times in past for various goods & services, when GST Council made changes in rate of tax on various supplies by way of rate notification. Then the situation arises that the rate of tax is changed between date of invoice, date of actual supply and date of payment. Now, the question comes up as to what should time of supply be? i.e. what should be the rate of GST, either old or new shall be applicable in various permutations or combinations of different point of time of supply, invoices and payment?
This situation is well discussed and covered by section 14 of CGST Act, 2017. All such situation is explained as under:
CGST-Section 14 - Change in rate of tax in respect of supply of goods or services
- When goods/services or both supplied before the change in rate of tax
- Invoice issued & payment received after the rate change - invoice date or payment receipt date whichever is earlier.
- Invoice issued before rate changed & payment received after rate changed- date of invoice.
- Payment received before rate change, invoice issued after rate change- date of payment.
| Service provided/ Goods supplied | Rate Changed Rate Changed |
Invoice & Payment received | Invoice or Payment received whichever is earlier |
| Service provided /Goods supplied & Invoice issued | Payment received |
Invoice issued date |
|
| Services provided Goods supplied & Payment received |
Invoice issued |
Date of payment received |
Example :
| SNo. | Date of Completion of service/supply of goods |
Date of Invoice | Date on Which Payment received | Rate of tax before 1-04-2023 |
Rate of tax w.e.f.1-04-2023 | Point of Taxation ( Time of Supply) |
| 1. | 25-3-23 | 22-4-23 | 15-4-23 | 5% | 12% | 15-4-23(12%) |
| 2. | 25-3-23 | 25-3-23 | 29-3-23 | 5% | 12% | 25-3-23(5%) |
| 3. | 25-3-23 | 20-4-23 | 28-3-23 | 5% | 12% | 28-3-23(12%) |
- When Service provided or Goods supplied after the change of rate
- Payment received after rate change, invoice issued prior to rate change- date of payment received.
- Invoice & Payment received before rate change- Invoice date or payment received whichever is earlier.
- Invoice after rate change, Payment received before rate change- date of issue of invoice.
| Invoice issued |
Rate Changed |
Services provided or Goods supplied & Payment received |
Date of payment received |
| Invoice issued & Payment received |
Services provided or Goods supplied |
Invoice or Payment received which is earlier |
|
| Payment received |
Services provided or Goods supplied & Invoice issued |
Invoice issued date |
| SNo. | Date of Completion of service/supply of goods |
Date of Invoice | Date on Which Payment received | Rate of tax before 1-04-2023 |
Rate of tax w.e.f.1-04-2023 | Point of Taxation ( Time of Supply) |
| 1. | 5-4-23 | 29-3-23 | 15-4-23 | 5% | 12% | 15-4-23(12%) |
| 2. | 5-4-23 | 25-3-23 | 29-3-23 | 5% | 12% | 25-3-23(5%) |
| 3. | 5-4-23 | 20-4-23 | 28-3-23 | 5% | 12% | 20-4-23(12%) |
Note: “date of payment” shall be date on which the payment is entered in the books of accounts or is credited to the bank account, whichever is earlier. But if the credit in the bank account is after four working days from the date of change in rate of tax , then date of payment means date of credit in bank account.
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