Mixed supply under s.8 CGST: classify by predominant component and tax Talimpu Dinusulu at prevailing 5% rate

AAR held the product is a mixed supply under s.8 CGST and must be classified as the component that attracts the highest rate of tax. As all constituent ingredients bear the same 5% rate, the mixed Talimpu Dinusulu is taxable at 5%. The HSN/classification should follow the constituent supply that is treated as predominant for classification (here the chana dal component present in the highest proportion), and the supply is to be taxed accordingly.

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ISSUES PRESENTED AND CONSIDERED

1. Whether a packaged combination of Jeera, Mustard, Channa dal and Urad dal (sold in a single packet without alteration of individual characteristics) constitutes a "mixed supply" within the meaning of Section 2(74) read with Section 8(b) of the CGST/State GST Acts.

2. If characterized as a mixed supply, how is the applicable HSN code and GST rate to be determined for the packaged combination-i.e., whether the packet must be classified under a single HSN/rate and, if so, which component's HSN/rate governs.

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Characterisation as Mixed Supply

Legal framework: Section 2(74) defines "mixed supply" as two or more individual supplies made in conjunction for a single price which do not constitute a composite supply. Section 8 differentiates composite and mixed supplies and prescribes treatment for mixed supplies under clause (b).

Precedent treatment: No judicial authorities or precedents were cited or relied upon in the ruling; determination is made solely on statutory definitions and illustrations in the Act.

Interpretation and reasoning: The combination packet contains separate ingredients (Jeera, Mustard, Channa dal, Urad dal) that retain their individual characteristics and can be supplied separately; they are supplied together for a single price. The Authority applied the statutory illustration of a package consisting of separate food items to conclude these ingredients meet the statutory definition of mixed supply.

Ratio vs. Obiter: Ratio - the finding that the packet is a mixed supply follows directly from the statutory definition and is essential to subsequent classification and taxation conclusions.

Conclusion: The packaged combination qualifies as a mixed supply under Section 2(74) and is not a composite supply.

Issue 2: Determination of HSN Code and GST Rate for the Mixed Supply

Legal framework: Section 8(b) states that a mixed supply comprising two or more supplies shall be treated as the supply which attracts the highest rate of tax.

Precedent treatment: No precedents were cited; the Authority applied the statutory rule in Section 8(b) to the facts.

Interpretation and reasoning: All individual components of the packet attract the same GST rate (5%) as per the notifications referenced. Because Section 8(b) directs treatment as the supply attracting the highest rate, the Authority considered the rule but found no differing rates across components. The Authority additionally noted the relative proportions (Channa dal 35%, Urad dal 30%, Mustard 30%, Jeera 5%) and concluded the packet is classifiable as the supply attracting the highest rate; where rates are identical, the product remains a mixed supply and classification follows the statutory principle. The Authority emphasized using the HSN of the particular supply that attracts the highest rate among the constituents where rates differ; in this case, all constituents share the same rate, so the highest-rate rule does not single out a different constituent by rate alone.

Ratio vs. Obiter: Ratio - the application of Section 8(b) to mixed supplies and instruction to use the HSN of the supply attracting the highest rate is a central legal holding. Observational reasoning regarding proportions (e.g., larger proportion of channa dal) is ancillary; the Authority noted proportions but based the conclusion primarily on the statutory rate analysis. The statement that the packet "shall be classifiable as the supply of the ingredient that attracts highest rate of tax" is the operative ratio; the observation about channa dal being the largest component functions as explanatory context where rates are equal.

Conclusion: The mixed packet is to be treated under the rule for mixed supplies (Section 8(b)) and classifiable by reference to the component attracting the highest rate; because all components attract the same rate (5%), the packet attracts 5% GST. The ruling directs classification in accordance with the statutory principle-use the HSN of the supply attracting the highest rate where rates differ; where rates are uniform, the mixed supply carries that common rate.

Ancillary Findings and Practical Direction

Legal framework applied: Notification prescribing HSN codes and rates for individual ingredients was consulted to verify each component's HSN and 5% rate.

Practical guidance: For tax invoices and classification, where mixed supplies contain items with differing HSNs and rates, the HSN and rate of the highest-rated component should govern. In the present factual matrix with identical rates, the mixed product is taxed at 5%; the Authority identified the individual HSN chapters headings for the constituents (0909 for Jeera, 1207 for Mustard, 0713 for Channa and Urad dals) as the relevant component codes.

Precedent and limitation: No change to or overruling of prior decisions was made. The ruling is confined to the facts presented (mix of listed ingredients without alteration of characteristics) and the statutory provisions cited; any different factual composition or alteration in characteristics may yield a different classification.

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