Composite Supply

[PARMENDERSINGH KOCHAR]

We are a C&F agent offering Door to Door services including Customs Clearance, Loading, Unloading & Transportation, Can we fall under Composite Supply & charge 18% GST & can claim ITC for our Truck's Tyres, Spares ETC ? Or we will stay as GTA with no ITC

[KASTURI SETHI]

In my view, it is composite supply. It is important to know the difference between composite supply and mixed supply. Difference between both terms is given in TMI's FAQ which extracted below for convenience:-

Composite supply is a supply consisting of two or more taxable supplies of goods or services or both or any combination thereof, which are bundled in natural course and are supplied in conjunction with each other in the ordinary course of business and where one of which is a principal supply. For example, when a consumer buys a television set and he also gets warranty and a maintenance contract with the TV, this supply is a composite supply. In this example, supply of TV is the principal supply, warranty and maintenance service are ancillary.

Mixed supply is combination of more than one individual supplies of goods or services or any combination thereof made in conjunction with each other for a single price, which can ordinarily be supplied separately. For example, a shopkeeper selling storage water bottles along with refrigerator. Bottles and the refrigerator can easily be priced and sold separately.

[PARMENDERSINGH KOCHAR]

Sir

GTA attract lower GST with No ITC, can we avail full ITC when composite supplied with Clearing & Forwading and when full 18% GST Paid ?

[KASTURI SETHI]

Your principal supply is C. & F. So ln my view, full ITC is admissible.

AI Summary

Composite supply classification permits input tax credit when clearing and forwarding is the principal supply for door-to-door services. The bundled provision of customs clearance, loading, unloading and transportation is characterised as a composite supply where one component-clearing and forwarding-is the principal supply. As such, the supplier applies the tax treatment of the principal supply and, per the adviser's view, may claim full input tax credit for inputs used in providing the composite door-to-door service.