Composite Supply

[Kaustubh Karandikar]

XYZ is developing a software which is embedded in the product manufactured and then the product is exported by XYZ. XYZ to issue

1) separate tax invoice for goods and service invoice for software or

2) being a composite supply, a single invoice for goods and services to be issued and the GST rate applicable for goods being principal supply will be applicable?

[Amit Agrawal]

If same is a composite supply and if principal supply involved is 'goods', then, tax-invoice for goods (i.e. principal goods) supplied (along-with gst as & if applicable) needs to be raised.

As you are aware, for zero-rate supplies, one has option not charge GST but export the same without payment of taxes under letter of undertaking.

These are ex facie views of mine, the same should not be construed as professional advice / suggestion.

[Padmanathan KV]

Need more inputs- Whether the product manufactured is separately marketable without the software? and Whether the software is separately marketable without the product? if not, In my opinion there is only single product (goods) and thus, only a single supply.

If not, then one has to examine whether the two independent supplies are naturally bundled in ordinary course of business or not. if they are natural bundled, then its a composite supply.

[KASTURI SETHI]

Dear Sir,

It is a composite supply and a single invoice is required.

[Shilpi Jain]

What is the relevance of this query? Either way it is an export. More factual clarity and reason for query would help to provide specific inputs.

[KASTURI SETHI]

Notwithstanding the factum of export, the correct and crystal reply on the issue will be useful for Home Consumption. Such query deserves more replies/opinions from other experts.

AI Summary

Composite supply: single invoice based on principal supply of goods may govern GST treatment and export zero-rating.
If the arrangement qualifies as a composite supply with goods as the principal supply, the supplier should issue the tax invoice for the goods with GST treatment as applicable; for exports the supplier may zero-rate the supply under a letter of undertaking. Determination depends on whether the goods and embedded software are separately marketable or are naturally bundled in ordinary business, with a single non-separately-marketable product indicating a single supply.