Composite supply

[SK Krishna]

Dear experts,

Tax payer has two seperate concerns, one supplying CSD Beverages at 28% rate of tax & 12% cess ( Total 40% of tax) and other concern providing transport facility to the first concern(only) at 12% rate of tax. Now Assessing officer questions the seperation of two businesses and alleges that the intention of the tax payer is to evade payment of tax at rate of 40% as composite supply. Kindly provide the following clarifications:

1. Whether the seperation of two businesses of the tax payer is not allowed under the Gst Act?

2.whether the supply has to be treated as two seperate ones or is it a composite supply and liable to be taxed at 40%?

3. Whether any case laws or Rulings were available to defend the case ?

Thanks in advance for all experts for your immense support.

AI Summary

Taxpayer's Business Structure Under Scrutiny: Are Separate Entities for Different Tax Rates Legal? A tax payer operates two separate businesses: one supplies CSD beverages taxed at 40%, and the other provides transport services taxed at 12%. The assessing officer questions the separation, suspecting tax evasion by avoiding a composite supply taxed at 40%. Experts in the forum argue that since the supplies are made by different entities, they aren't composite, and the separation is legal. They emphasize that unless the law changes, the department cannot challenge the tax structure if it complies with legal boundaries. They suggest the burden of proof lies with the department if it insists on a 40% tax rate.