# Composite Supply [Section 2(30)]
## Definition
A composite supply is a supply made by a taxable person to a recipient which:
1. Comprises two or more taxable supplies of goods/services/both, or any combination thereof.
2. Is naturally bundled and supplied in conjunction with each other in the ordinary course of business.
3. One of which is a principal supply.
## Principal Supply [Section 2(90)]
The supply of goods/services which constitutes the predominant element of a composite supply and to which any other supply forming part is ancillary.
## How to Identify 'Naturally Bundled in Ordinary Course of Business'?
It depends on normal/frequent practices in that business area. Indicators include:
### 1. Consumer Perception
If a large number of recipients reasonably expect such services as a package.
- E.g., a mobile phone is always sold with a battery.
### 2. Industry Practice
Majority of service providers in the area offer a similar bundle.
- E.g., catering on board + air transport is bundled by most airlines.
### 3. Nature of the Bundle
One service is the main service; others are incidental/ancillary, enhancing enjoyment of the main service.
- E.g., hotel stay + complimentary breakfast and dinner – meals are ancillary to accommodation.
### 4. Other Illustrative Indicators (indicative, not determinative)
- Single price charged irrespective of which components consumer uses.
- Elements are advertised as a package.
- Different elements are not available separately.
- Different elements are integral to one overall supply – removing one affects the nature.
## Tax Treatment [Section 8(a)]
- A composite supply is treated as a supply of the principal supply.
- Entire value is taxed at the rate applicable to the principal supply.
## Important Clarifications
### Printing Industry
- Printing of books/pamphlets where content is owned by publisher and physical inputs (paper) belong to printer → Supply of printing is principal supply → Supply of SERVICE.
- Printing of envelopes/letter cards/boxes where printer uses its own physical inputs to print recipient's design/logo → Supply of goods is predominant → Supply of GOODS.
### Healthcare
- Food to in-patients as per doctor/nutritionist advice → part of composite healthcare → not separately taxable.
- Food to out-patients/attendants/visitors → taxable separately.
### Bus Body Building
- Involves both goods and services. Classification depends on which is principal supply – determined case by case.
### Retreading of Tyres
- If old tyres belong to customer → composite supply of SERVICE (retreading process is principal).
- If old tyres belong to supplier of retreaded tyres → supply of GOODS.
### Cinema Halls – Food & Beverages
- F&B in cinema halls is taxable as 'restaurant service' IF: supplied independent of cinema exhibition AND as part of a service.
- If cinema ticket and F&B are sold together as composite supply → GST at rate applicable to cinema exhibition service.