Supply Of Sharpener Along With Pencils Is A Mixed Supply: Gujarat AAR

The Gujarat Authority for Advance Ruling (AAR) has ruled that the supply of sharpeners along with pencils is covered under the category of "mixed supply."The two-member bench of Amit Kumar Mishra and Milind Kavatkar has observed that a mixed supply containing more than two supplies shall be treated as a supply of the particular supply that attracts the higher rate of tax in the mixed supply. The applicant is required to use the HSN code of the particular supply, which attracts a higher rate of tax among all the taxable supplies contained in a pack or box.The applicant is in the business of manufacturing and supplying all kinds of stationery items like wooden pencils, sharpeners, erasers, mathematical and drawing instruments, ballpoint pens, wax crayons, oil pastels, and a wide range of student art materials.The applicant submitted that the product contains 10 pieces of pencils made of wood with pencil leads made of graphite. The pack of 10 pencils is sold along with a sharpener and eraser included in the pack as accessories.The applicant sought an advance ruling on the issue of whether the supply of pencil sharpeners along with pencils, which is the principal supply, will be considered the "composite supply" or "mixed supply."The term "composite supply" is defined under Section 2(30) of the CGST Act, 2017. "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 that is naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. For example, where goods are packed and transported with insurance, the supply of goods, packing materials, transport, and insurance is a composite supply, and the supply of goods is a principal supply.The term "mixed supply" is defined under Section 2(74) of the CGST Act, 2017. Mixed supply means two or more individual supplies of goods or services, or any combination made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. For example, a package consisting of canned foods, sweets, chocolates, cakes, dry fruits, aerated drinks, and fruit juices supplied for a single price is a mixed package. Each of these items can be supplied separately and is not dependent on the others. It will not be a mixed supply if these items are supplied separately.The AAR held that the applicant's supplies are covered under the category of mixed supply, and as per the provision of mixed supply, the supply that attracts the higher rate of tax shall be the applicable rate for the supply.Applicant’s Name: Doms Industries Pvt. Ltd.Date: 30.12.2022Click Here To Read The Ruling

Supply Of Sharpener Along With Pencils Is A Mixed Supply: Gujarat AAR

Mariya Paliwala

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Supply Of Sharpener Along With Pencils Is A Mixed Supply: Gujarat AAR

Mariya Paliwala

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INR 1099+GST

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