Order Date – 30 December 2022

Facts -

• The appellant, M/s Doms Industries Pvt. Ltd is manufacturer and suppliers of all kind of the stationary items like wooden pencils, sharpeners, erasers, mathematical & drawing instruments, ballpoint pens, wax crayons & oil pastels, and a wide range of student art materials.
• The applicant submitted that GST council in 47th Meeting recommended changes in GST rate applicable on specified goods and services viz. wherein rate of pencil sharpener (HSN 8214) and scale & mathematical instrument (HSN 9017) increased from 12% to 18% w.e.f. 18 July .
• The applicant in combination with other products which are liable to GST rate @ 5% and l2% the applicant is supplying following products in which Pencil Sharpener and Scales are sold as accessories- (l) Doms Al Pencil (2) Doms Smart Kit (3) Doms My first Pencil Kit.
• The applicant has submitted that with respect to the above multiproduct packs, all the conditions are fulfilled, such supplies may qualify as 'Composite Supply'. Accordingly, the GST rate as applicable on the principal product which in the instant case is pencil/colour pencil/crayons will apply to the complete set. Hence, these products shall fall under Heading 9609 and chargeable to GST rate of 12%.

Issues –

• Whether the supply of Pencils Sharpener along with Pencils being the Principal supply will be considered as the "Composite Supply" or "Mixed Supply".

Order –

• The authorities find that the applicant supplies the different products in single box/pack and in single price. These supplies are made in the name of (i) Doms A1 Pencil (ii) Doms Smart kit (iii) Doms My First Pencil Kit.
• Pencil sharpener and eraser supplied with pack is not an integral part of the Pencil but it is useful for the Pencil. Thus the pencil, pencil sharpener and eraser are not naturally bundled but are distinct to each other. Further, three goods i.e. pencil, pencil sharpener and eraser are not naturally bundled and cannot say supplied in conjunction with each other in an ordinary course of business. Hence the condition of composite supply is not satisfied.
• Also all the three product have their individual identity, therefore among all the three goods no goods can be considered as principal supply and other ancillary.
• Thus, the supply of Pencils Sharpener along with Pencils is covered under the category of "Mixed Supply".
• The applicant all the supplies i.e. kit if containing Sharpener and if tax rate of that particular sharpener is highest among all the product containing in that particular supply i.e kit, in such case the applicant is liable to pay the highest tax rate and HSN code is to be used of that particular supply having highest rate.