EXAMPLE-75  

 Mr. A leased its factory premises along with plant and machinery. Plant and machinery were attached to the earth. The subject matter of the lease was the woolen factory and the same was leased out as a unit and not as an individual piece of plant and machinery.  Question arises whether above transaction is mixed supply/ composite supply including transfer of right to use or renting of immovable property?

Answer

In GST according to section 2(30) composite supply means a supply comprising two or more goods/services, which are naturally bundled and supplied with each other in the ordinary course of business, one of which being a principal supply. The items cannot be supplied separately.  In the above question leasing of factory is the principal supply and right to use plant and machinery is supplied with the principal supply. Thus, if it is treated composite supply as per section 8 of CGST Act, tax liability will be the tax on the principal supply (renting of immovable property) i.e., at GST rate on such supply. According to schedule II renting of immovable property is deemed as supply of services.