Composite or Mixed Supply

[Kaustubh Karandikar]

• Instruments viz. diagnostic kit are supplied on ‘Free of Cost’ basis to the customer under a Delivery Challan without payment of GST with an assurance of certain amount of business with regard to reagents used in these instruments. The value of such instruments is approx. ₹ 10 Lacs.
• To install the said instruments at the customer site, amount towards ‘Installation and Commissioning’ is recovered from the customer under Tax Invoice. Value of the invoice is ₹ 1.25 Lacs and GST of ₹ 0.23 Lacs is charged on the same.
• Will this be treated as ‘Composite or Mixed Supply’ and if yes, whether GST will be demanded on the free of charge instruments supplied without payment of GST?

AI Summary

Barter and valuation: non-monetary consideration can trigger GST based on open market value under valuation rules.
The core issue is whether free supply of instruments with a separately charged installation and contractual reagent procurement obligation constitutes composite/mixed supply or barter. Separate invoicing for free equipment and installation suggests no composite supply for rate purposes, but contractual commitments to procure reagents may constitute consideration. If non-monetary consideration exists, valuation follows Rule 27, prioritising Open Market Value or monetary consideration plus equivalent amount for non-monetary consideration, with further fallback valuation methods.