In re Jainish Anantkumar Patel (GST AAR Gujarat)
Question: The applicant wants to trade the below mentioned items:-
1. Supari in grated form of cut in different shape in a separate pouch packing.
2. Lime (Chuno) in a separate packing.
3. Tobacco (Chewing Tobacco) in a separate packing.
All the above three items will be delivered to the customer in a transparent plastic pouch for the convenience of carrying it and the invoice prepared for the same will have three separate line items of the items mentioned above charged separately.
“Will the delivery of items in a single pouch classify the goods as mixed supply as per the definition under Section 2(74) of the CGST Act, 2017 and tax be collected at the rate of tax of highest item in the supply? In this case, the highest rate of tax could be that of Tobacco at 28% alongwith 160% cess.
Answer: The delivery of the aforementioned items by the applicant M/s. Jainish Anantkumar Patel in a single transparent plastic pouch to the customers will be considered as a ‘composite supply of goods’ as per the definition under Section 2(30) of the CGST Act, 2017 with the principal supply of ‘Chewing Tobacco’ falling under Tariff item 24039910 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). The product ‘Chewing Tobacco’ appears at Sr.No.15 of Schedule-IV of the Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 issued under the CGST Act, 2017 on which GST liability is 28% (14% CGST + 14% SGST). The said product also appears at Sr.No.26 of Notification No.01/2017- Compensation Cess (Rate) dated 28.06.2017 issued under the CGST Act, 2017 under which a Compensation Cess of 160% is leviable on it. Also, as per Section 136 of the Finance Act, 2001, a National Calamity Contingent Duty (NCCD) of 10% is leviable on chewing tobacco as per the Seventh Schedule to the Finance Act, 2001.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, (Gujarat)
The applicant M/s. Jainish Anantkumar Patel, who is an unregistered person in GST has submitted that he wants to carry on the trading activity of Grated Supari, Lime and Tobacco by putting them together in a transparent plastic pouch for the sake of easy carry by the customer. The applicant further states that all the items will be supplied in a single pouch, will have separate price and will be shown in the invoice as a separate bill of item and at no stage will a single price be charged from the customers. He has also stated that the plastic pouch will be used to merely facilitate the customer for easy carry of the products and that each of these items can be supplied separately and is not dependent on each other, so, they cannot be classified as composite supply.
2. The applicant has further submitted that as per definition under Section 2(74) of the CGST Act, 2017, ‘mixed supply’ means two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. He has stated that as per the above definition it can be clearly seen that there should be a single price for two or more individual supplies of goods or services, or any combination thereof, made in conjunction with each other by a taxable person and in this case the applicant will charge separate price on all products; that as each of these items can be supplied separately and is not dependent on the other, they cannot be classified as composite supply; that the customer can buy all the three items together or any single item separately and therefore the applicant shall charge tax on each item separately as per the applicable tax rate on such item; that there shall not be a single highest rate of tax charged on total amount of the invoice as per the definition of mixed suply. The applicant has concluded his submission by stating that accordingly, the said supply of goods shall not be treated as ‘mixed supply’ as per the CGST Act and all the items shall be subject to the tax rate as applicable to each individual item. The applicant has put forward the following question on which advance ruling is required:
“The applicant wants to trade the below mentioned items:-
1. Supari in grated form of cut in different shape in a separate pouch packing.
2. Lime(Chuno) in a separate packing.
3. Tobacco in a separate packing.
All the above three items will be delivered to the customer in a transparent plastic pouch for the convenience of carrying it and the invoice prepared for the same will have three separate line items of the items mentioned above charged separately.
“Will the delivery of items in a single pouch classify the goods as mixed supply as per the definition under Section 2(74) of the CGST Act, 2017 and tax be collected at the rate of tax of highest item in the supply? In this case, the highest rate of tax could be that of Tobacco at 28% alongwith 160% cess.”
DISCUSSION & FINDINGS:
3. We have considered the submissions made by the applicant in their application for advance ruling as well as the arguments/discussions made by their representative Shri Rubbil A.Bhandari at the time of personal hearing. We have also considered the issues involved on which Advance Ruling is sought by the applicant.
4. At the outset, we would like to state that the provisions of both the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, 2017 are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to similar provisions of the GGST Act.
5. Based on the submission of the applicant as well as the arguments/discussions made by the representative of the applicant during the course of personal hearing, we find that the main issue to be decided is whether the delivery of the 3 items Grated Supari, Lime and Tobacco put together in a transparent plastic pouch by the applicant for the sake of easy carry by the customer will be treated as mixed supply or otherwise. We also find that supari is the word used in common parlance for arecanut/ betelnut whereas the lime used (along with tobacco and supari) is slaked lime and is known in common parlance, especially in Gujarat as ‘chuno’. Also the tobacco referred to by the applicant is not the tobacco, which is used in cigarettes or biris but chewed or held in the mouth, typically between the cheek and gums and is, therefore, called the Chewing Tobacco. But, before dwelling on the issue of whether the above is a mixed supply in GST or otherwise, we feel it necessary to find out under which sub-headings each of the above 3 items fall and what is the GST liability on each of them.
6. In order to determine the classification of the above 3 items, we will be first required to refer to the Notification No.01/2017-Central Tax (Rate) dated 28.06.2017 containing the headings, sub-headings as well as the rates of Central Tax GST applicable to various goods which are covered under 6 schedules as under:
