I am a local trader and have the following supplies:a. I sale Air conditioners along with freight, …
I am a local trader and have the following supplies:
a. I sale Air conditioners along with freight, insurance and Installation.
b. I supply UPS with additional batteries.
My query is: Do these constitute composite supply as defined by the GST act?
Composite supply would be defined as a supply of two or more goods which are naturally bundled together, such that sale of one goods (principal supply) results in the sale of other goods (secondary goods).
In the case of the air conditioner sold and transported by the manufacturer to the dealer along with insurance, ordinarily the principal supply would be that of the AC ; transport service is purely incidental to that supply. And since the AC is the principal supply, the rate of GST would be the rate on the AC, and this rate will be calculated for the entire value of the sale.
Total Sale value = (price of AC + Price of transportation + Insurance + Installation)
Rate Applicable = Rate of AC
GST = Total sale value * Rate Applicable
However, in the case of the UPS, the supply of additional batteries along with UPS is does not constitute goods naturally bundled together. (UPS come with in built batteries).
So, if they are billed together as one supply, it is a case of mixed supply rather than composite supply. The rate of GST applicable would be the rate of UPS or the rate of the battery, whichever is higher,
Total sale value = (Price of UPS+ batteries)
Rate Applicable = Rate of UPS or Rate of Battery, whichever is higher.
