Businesses rarely supply one thing at a time. Section 8 decides how a bundle is taxed: a naturally bundled "composite supply" takes the rate of its principal supply; an artificial "mixed supply" takes the highest rate among its parts.
Key points
- Under section 8(a) of the CGST Act, 2017, a composite supply is treated as a supply of its principal supply.
- Under section 8(b), a mixed supply is treated as a supply of the item attracting the highest rate of tax.
- The test for a composite supply is natural bundling in the ordinary course of business (section 2(30)); a mixed supply is a combination for a single price that is not naturally bundled (section 2(74)).
- In Union of India v Mohit Minerals (2022) the Supreme Court held that the elements of a composite supply cannot be split and taxed separately.
The provisions
8Composite and mixed supplies
Statutory text
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 supply, shall be treated as a supply of such principal supply; and
(b) 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.
*Enforced w.e.f. 1st July 2017.
Case on this provision
Union of India v Mohit Minerals Pvt Ltd
(2022) 10 SCC 700 · 19.05.2022 · Supreme Court, 3 Judges (D.Y. Chandrachud, Surya Kant, Vikram Nath JJ.)
- Facts
- Importers buying on CIF terms paid IGST on the full value of the goods, including freight, and were also made to pay IGST under reverse charge on the ocean freight paid by the foreign seller to the shipping line.
- Held
- In a CIF import the transport is part of a composite supply whose principal supply is the goods. Section 8 treats the composite supply as a supply of the goods; taxing the freight again separately in the importer's hands offends it.
- Here
- The leading authority on section 8: a composite supply is taxed once, as its principal supply.
Statutory text as published on the CBIC tax information portal, as on 03.10.2026; the numbered notes record each amendment. Official source
Common questions
- How is a composite supply taxed?
- At the rate applicable to its principal supply (section 8(a) of the CGST Act).
- How is a mixed supply taxed?
- At the highest rate among the supplies in it (section 8(b)).
- What is the difference between composite and mixed supply?
- A composite supply is naturally bundled in the ordinary course of business, with a principal supply; a mixed supply is an artificial combination for a single price.
Commentary and case notes checked against the judgments and CBIC sources on 04.10.2026.
What it means
Start with the definitions. A composite supply (section 2(30)) has two or more supplies naturally bundled and supplied together in the ordinary course of business, one of them the principal supply — the predominant element to which the others are ancillary (section 2(90)). Goods sent with packing, transport and insurance are the statute's own example.
A mixed supply (section 2(74)) is two or more individual supplies made together for a single price where the combination is not a composite supply — a gift hamper of sweets, chocolates and drinks is the statutory illustration.
Whether bundling is "natural" is a question of fact: would the items ordinarily be supplied together, and does the customer see them as one supply? A separate price for each item points away from a single supply. Note that works contracts and restaurant service are classified by Schedule II, so section 8 is not needed for them.