TMI Blog2021 (1) TMI 493X X X X Extracts X X X X X X X X Extracts X X X X ..... even when an individual goes to a pan shop and asks for the above combination known popularly as mawa in Gujarat, the pan shop owner will give the 3 items i.e. grated supari, slaked lime and chewing tobacco separately so as to enable the person to mix them as per his requirement before consuming it. We also find that the precise reason why the applicant wants to supply the above 3 items in a single transparent plastic pouch, although packed separately and charged itemwise, to the customers, is to enable them to mix these items as per the required proportion before consuming it. Thus, it can be concluded that the 3 items mentioned above are naturally bundled and supplied in conjunction with each other in the ordinary course of business and this combination is nothing but a composite supply of goods, wherein chewing tobacco is the principal supply. 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. However, as discussed earlier and admitted by the applicant himself, the aforementioned combin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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: (i) 2.5 per cent. in respect of goods specified in Schedule I, (ii) 6 per cent. in respect of goods specified in Schedule II, (iii) 9 per cent. in respect of goods specified in Schedule III, (iv) 14 per cent. in respect of goods specified in Schedule IV, (v) 1.5 per cent. in respect of goods specified in Schedule V, and (v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n order to find out the tariff heading of Chewing Tobacco, we need to refer to Chapter- 24 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) which pertains to Tobacco and manufactured tobacco substitutes . The said item appears at Heading 2403. Heading 2403 reads, as under: 2403 OTHER MANUFACTURED TOBACCO AND MANUFACTURED TOBACCO SUBSTITUTES; HOMOGENISED OR RECONSTITUTED TOBACCO; TOBACCO EXTRACTS AND ESSENCES - Smoking tobacco, whether or not containing tobacco substitutes in any proportion : 2403 11 -- Water pipe tobacco specified in Sub-heading Note to this Chapter: 2403 11 10 --- Hookah or gudaku tobacco 2403 11 90 --- Other 2403 19 -- Other: 2403 19 10 --- Smoking mixtures for pipes and cigarettes --- Biris: 2403 19 21 ---- Other than paper rolled biris, manufactured without the aid of machine 2403 19 29 ---- Other 2403 19 90 --- Other - Other : 2403 91 00 -- Homogenised or reconstituted tobacco 2403 99 -- Other : 2403 99 10 --- Chewing tobacco 2403 99 20 --- Preparations containing chewing tobacco 2403 99 30 --- Jarda scented tobacco 2403 99 40 --- Snuff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2825 2522 10 00- Quicklime 2522 20 00- Slaked lime 2522 30 00- Hydraulic lime 9.1 From the above, it can be seen that Lime (Slaked lime) appears at Sub-heading No.25222000 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). Further, as per Notification No.01/2017-Central Tax (Rate) dated 28.06.2017, the said item appears at Sr. No.131 of Schedule-I of the said notification [on which GST liability is 5% (2.5% CGST + 2.5% SGST)] and reads as under: Sr.No. Chapter/Heading/Sub-heading/Tariff item Description of goods 131. 2522 Quicklime, slaked lime and hydraulic lime, other than calcium oxide and hydroxide of heading 2825. 10. Next, we need to find whether the combination of the 3 items discussed above i.e. Grated supari, slaked lime and chewing tobacco shall be considered as a mixed supply (as asked by the applicant). For this purpose, we feel it necessary to go through the definitions of both composite supply and mixed supply as defined under Section 2 of the CGST Act, 2017 in order to find out whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime is widely used in Maharashtra, Gujarat, Bihar and Uttar Pradesh. One point to be noted in all of the above examples is that chewing tobacco is always the main ingredient and the other two are added to it as per required proportion by the individual before consuming it. However, the very purpose of consuming this combination is that they have both stimulant and relaxation effects but regular consumption of the same leads to addiction. It is believed to produce a sense of euphoria in the body which is akin to that of smoking. It is also believed to produce a sense of well being, warm sensations in the body, sweating, salivation, palpitation and heightened alertness, tolerance to hunger and increased capacity and stamina to work. In this context, we would like to refer to an item known in common parlance as gutkha , which is a combination of the above 3 products. The said item is defined as under: Gutka, ghutka guṭkha or betel quid is a chewing tobacco preparation made of crushed areca nut (also called betel nut), tobacco, catechu, paraffin wax, slaked lime and sweet or savory flavourings, in India, Pakistan, other Asian countries, and North America . 10.3 It can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther by a taxable person for a single price where such supply does not constitute a composite supply. However, as discussed earlier and admitted by the applicant himself, the aforementioned combination of 3 items is not sold for a single price i.e. each of these items are shown separately in the invoice and separate prices are charged for each item. Also as discussed earlier in para 10.3, since the aforementioned combination constitutes a composite supply of goods, wherein chewing tobacco is the principal supply, it can be safely concluded that the aforementioned combination is not a mixed supply of goods. 11. Now, since it has been established that the above supply of combination of 3 items made by the applicant is a composite supply of goods with chewing tobacco being the principal supply, we are required to examine the classification and tax liability on the same. For this purpose, we will be required to refer to Section 8 of the CGST Act, 2017, which reads as under: The tax liability on a composite or a mixed supply shall be determined in the following manner, namely:- (a) a composite supply comprising two or more supplies, one of which is a principal supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I N G 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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