GST Ruling: Tea and Premix Bundles Classified as Mixed Supply

In re Jivraj Tea International Pvt. Ltd. (GST AAR Gujarat)

The applicant, a registered GST taxpayer engaged in manufacturing and supplying various types of tea and premix tea, sought an advance ruling from the Gujarat Authority for Advance Ruling (AAR) regarding the GST classification of bundled supplies. The applicant produces several varieties of black tea, green tea, herbal tea, flavoured tea, and masala instant premix tea. While the teas are generally taxed at 5% under different HSN codes, the instant premix tea attracts 18% GST under a separate HSN code. The applicant intends to offer sachets of premix tea along with multiple tea products as an introductory offer to assess market demand. These combinations would be sold for a single price, with predetermined quantities of premix tea supplied per carton for each product type.

The applicant’s questions focused on whether bundling these products should be classified as a composite supply or a mixed supply under GST. They argued that the tea products constitute the principal supply and that the premix sachets should be treated as ancillary. They referred to definitions under the CGST Act: “principal supply,” “composite supply,” and “mixed supply,” as well as statutory illustrations. Under a composite supply, naturally bundled supplies attract the tax rate of the principal supply; mixed supply attracts the highest applicable tax rate among the bundled items.