In re Srikanth Industries (GST AAR Andhra Pradesh)
M/s Srikanth Industries, a supplier of pulses, spices, and other food items, sought an Advance Ruling from the Andhra Pradesh AAR regarding the correct HSN code and GST tax rate for a combination product labeled ‘Mixed Talimpu Dinusulu’ (tempering ingredients).
Product Composition and Applicant’s Contention
The proposed ‘Mixed Talimpu Dinusulu’ is a pre-packaged combination consisting of four ingredients with the following composition:
| Article Name | Mixing % | HSN Code (Declared by Applicant) | Tax Rate (Declared by Applicant) |
|---|---|---|---|
| Channa Dal | 35% | 07139010 | 5% |
| Urad Dal | 30% | 07133100 | 5% |
| Mustard Seeds | 30% | 12075090 | 5% |
| Jeera | 5% | 09093129 | 5% |
The applicant contended that since each individual ingredient has a 5% GST tax rate, and because the nature of the articles is not changed by simply packing them together, the final ‘Mixed Talimpu Dinusulu’ product should also have a 5% tax rate. The applicant sought clarification on the HSN code and tax rate to be used in the tax invoices due to the different HSN codes for the four components.
AAR Discussion and Findings
The Authority analyzed the product under the classification provisions for combined supplies in the CGST Act, 2017.
1. Classification as Mixed Supply: The AAR referred to Section 2(74) of the CGST Act, which defines a “mixed supply” as two or more individual supplies of goods or services, or any combination thereof, made for a single price, where such supply does not constitute a composite supply. The ingredients (canned foods, sweets, etc., in the illustration provided) can be supplied separately and are not dependent on each other.
2. Taxability Rule for Mixed Supply: Section 8(b) of the CGST Act dictates how tax liability is determined for a mixed supply: “a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax.” This provision also mandates that the HSN code used must be that of the particular supply which attracts the highest rate of tax within the mixed supply.
3. Application to ‘Mixed Talimpu Dinusulu’: The AAR held that the product ‘Mixed Talimpu Dinusulu’ qualifies as a mixed supply under Section 8(b) of the CGST Act. The Authority noted that, in this specific case, all ingredients are attracting the similar rate of tax, i.e., 5%. The AAR also observed that ‘chana dal’ is used in the highest proportion (35%).
AAR Ruling
