Independent Supply

[MAHTAB KHAN]

The invoice of ₹1,332/- pertains to a grocery packet comprising both exempt and taxable items. The items are clearly itemized with respective quantities, weights, rates, and applicable GST. The details are as follows:

• Exempt Items (as per Notification No. 2/2017-Central Tax (Rate)):

o Aata (Flour): 10 kg

o Chawal (Rice): 10 kg

o Daal (Pulses): 2 kg

o Aaloo (Potatoes): 5 kg

o Namak (Salt): 500 gm

• Taxable Items (as per applicable HSN codes and rates):

o Bhuna Chana (Roasted Gram, unbranded): 2 kg, taxable at 5% (HSN 2008)

o Sarso Tel (Mustard Oil): 2 Ltr, taxable at 5% (HSN 1514)

o Dhaniya Powder (Coriander Powder): 100 gm, taxable at 5% (HSN 0909)

o Mirch Powder (Chili Powder): 100 gm, taxable at 5% (HSN 0904)

o Haldi Powder (Turmeric Powder): 100 gm, taxable at 5% (HSN 0910)

GST at 5% is levied only on the taxable items 5% GST on taxable items, resulting in a total GST of ₹18.50. The total invoice value is ₹1,332, comprising ₹1,170 (exempt items), ₹370 (taxable items), and ₹18.50 (GST).

The GST department has treated the entire supply as a ‘mixed supply’ under Section 2(74) of the CGST Act, 2017, alleging that the grocery packet is a combination of goods supplied together for a single price, which do not constitute an 'Independent' or ‘composite supply’. As a result, they have demanded GST on the entire invoice value, including previously exempt items, by applying the highest applicable GST rate (i.e., 5%).

My openion is that If the invoice separately lists each item with its quantity, weight, rate, and applicable GST, the supplies are treated as independent supplies, not composite or mixed. Each item is taxed (or exempted) based on its own GST rate, and the invoice total reflects the sum of individual amounts. There is no single price, and each item is separately identifiable and priced.

 

AI Summary

GST Challenge: Mixed Supply Dispute Highlights Nuanced Taxation of Grocery Packet with Exempt and Taxable Items A grocery packet invoice containing exempt and taxable items sparked a GST dispute. The tax authority classified the supply as a 'mixed supply' under Section 2(74) of CGST Act, demanding 5% GST on the entire invoice value. The forum argues that since items are separately itemized with distinct quantities, weights, and rates, each item should be taxed independently based on its specific GST classification, not as a composite supply.