Sec 2(30) – Composite Supply

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Sec 2(30) – Composite Supply 2017-04-14T02:50:17+00:00
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    “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;
    Illustration.- Where goods 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;

    Priya MadrechaPriya Madrecha
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    A supply will be regarded as a ‘composite supply’ if the following elements are present:
    (a)    The supply should consist of two or more taxable supplies;
    (b)    The supplies may be of goods or services or both;
    (c)    The supplies should be naturally bundled;
    (d)    They should be supplied in conjunction with each other in the ordinary course of business;
    (e)    One of the supplies should be a principal supply (Principal supply means the predominant supply of goods or services of a composite supply and to which any other supply is ancillary).
    The following aspects need to be noted:
    •    The way the supplies are bundled must be examined. Mere conjoint supply of two or more goods or services does not constitute composite supply.
    •    The two (or more) supplies must appear natural when bundled and presented to the recipient.
    •    The ancillary supply becomes necessary only because of the acceptance of the predominant supply.
    •    The method of billing, assignment of separate prices etc. may not be relevant.
    •    The tax treatment of a composite supply would be as applicable to the principal supply.
    Illustrations of composite supply are as follows:
    (a)    Supply of laptop and carry case;
    (b)    Supply of equipment and installation of the same;
    (c)    Supply of repair services on computer along with requisite parts; (d)     Supply of health care services along with medicaments.

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