GST Mixed Supply Rules for Bundled Tea Products
Bundling different tea products for a single price is a mixed supply, taxable at the highest rate of any item in the bundle.
- Ruling
- GUJ/GAAR/R/2025/60 dated 04.12.2025
- Dated
- 04 Dec 2025
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Bundled tea products are not naturally linked in the ordinary course of business.
- The Gujarat Authority for Advance Ruling classified these bundles as mixed supply.
- Mixed supplies are taxed at the highest rate among all items in the bundle.
- Since all items currently attract 5% GST, the bundle is taxed at 5%.
In short
The company asked if selling different tea products together for one price counts as a composite supply or a mixed supply under the Goods and Services Tax (GST) law. A composite supply is a natural bundle where one item is essential to the other, while a mixed supply is a combination of items sold together for convenience. The authority decided that because these tea products are not naturally dependent on each other, they are a mixed supply.
What has changed
How it worked before
Businesses often assumed that bundling products for a single price might qualify as a composite supply, which would allow them to tax the entire bundle based on the main product's rate.
What has changed
The authority ruled that promotional bundles of tea are mixed supplies. In practice, this means if you bundle items with different tax rates, you must charge the highest GST rate applicable to any single item in that package.
Who this affects
Tea manufacturers and retailers who sell promotional bundles or gift packs containing different types of tea products for a single price.
An example
Imagine a tea shop creates a 'Morning Gift Set' containing premium tea leaves and a separate instant tea premix, sold for one price. If the tea leaves are taxed at 5% and the premix is taxed at 12%, this ruling suggests the entire set would be a mixed supply. Consequently, the shop would have to pay 12% GST on the total price of the gift set, rather than the lower rate.
What you should do
Review your product bundles to see if they are naturally linked or just sold together for convenience. Remember that an advance ruling only binds the company that asked and its specific tax office; it is not a general law for all businesses. If you are unsure about your tax classification, consult a professional to assess your specific bundle.
If you do nothing
If you incorrectly classify a mixed supply as a composite supply, you may underpay your GST. A tax officer could demand the difference in tax, along with interest and potential penalties for incorrect reporting. Relying on a ruling that does not apply to your specific business model can lead to costly disputes during an audit.
The terms explained
- Composite Supply
- A bundle of two or more goods that are naturally sold together in the ordinary course of business, where one item is the main product and the others are supporting items.
- Mixed Supply
- Two or more goods sold together for a single price that are not naturally bundled, meaning they could easily be sold separately.
- HSN Code
- A standardized system of numbers used to classify goods for taxation purposes, ensuring the correct tax rate is applied to a product.
The ruling in detail
Authority for Advance Ruling
M/s Jivraj Tea International Pvt. Ltd.
GUJ/GAAR/R/2025/60 dated 04.12.2025 · Gujarat
Questions before the authority
- Whether the supply of Jivvij Samaara Masala Instant Premix Tea sachets with Jivvij Samaara Black Tea Leaf 5 kg Pouch being the principal supply will be considered as the Composite Supply or Mixed Supply? What will be the rate of tax for the above?
- Whether the supply of Jivvij Samaara Masala Instant Premix Tea sachets with Samaara Premium Ctc Leaf Black Tea 250 gms Jar, 500 gms Jar & 900 gms Jar being the principal supply will be considered as the Composite Supply or Mixed Supply? What will be the rate of tax for the above?
- Whether the supply of Jivvij Samaara Masala Instant Premix Tea sachets with Premium Lemon, Jasmine and Mint Green Tea being the principal supply will be considered as the Composite Supply or Mixed Supply? What will be the rate of tax for the above?
- Whether the supply of Jivvij Samaara Masala Instant Premix Tea sachets with Herbal Tea (Chai Vedic) being the principal supply will be considered as the Composite Supply or Mixed Supply? What will be the rate of tax for the above?
- Whether the supply of Jivvij Samaara Masala Instant Premix Tea sachets with Pyramid Tea Bags being the principal supply will be considered as the Composite Supply or Mixed Supply? What will be the rate of tax for the above?
- Whether the supply of Jivvij Samaara Masala Instant Premix Tea sachets with Flavoured Black Tea (Saffron Tea & Rose Tea) being the principal supply will be considered as the Composite Supply or Mixed Supply? What will be the rate of tax for the above?
- In future, if we supply Jivvij Samaara Masala Instant Premix Tea sachets with any other product having rate of tax at 5% being the principal supply, will be considered as the Composite Supply or Mixed Supply? What will be the rate of tax for the above?
- What will be HSN code to be used by us in above case?
Facts
The applicant is a manufacturer and supplier of various types of tea. They intend to supply sachets of Masala Instant Premix Tea along with their regular tea products as an introductory offer to analyze market demand. These items are sold together for a single price.
Ruling
| Question | What the authority ruled |
|---|---|
| Premix tea with Black Tea Leaf 5 kg Pouch | Mixed Supply; 5% GST None |
| Premix tea with Premium Ctc Leaf Black Tea (various sizes) | Mixed Supply; 5% GST None |
| Premix tea with Premium Lemon, Jasmine and Mint Green Tea | Mixed Supply; 5% GST None |
| Premix tea with Herbal Tea (Chai Vedic) | Mixed Supply; 5% GST None |
| Premix tea with Pyramid Tea Bags | Mixed Supply; 5% GST None |
| Premix tea with Flavoured Black Tea | Mixed Supply; 5% GST None |
| Future supply with other 5% rated products | Mixed Supply; 5% GST Subject to future tax rate changes |
| HSN code to be used | Any HSN of the supplies in the bundle Applicable while rates are equal; otherwise use HSN of the highest rated supply |
The Authority ruled that the supply of premix tea sachets bundled with various tea products constitutes a **Mixed Supply** rather than a Composite Supply. Consequently, the entire supply is taxable at the rate applicable to the item with the highest tax rate within the bundle. Since all items currently attract a 5% GST rate, the bundled supply is taxable at 5%.
Reasoning
The Authority determined that the products are not naturally bundled in the ordinary course of business, as the premix tea is not an ancillary commodity essential for the enjoyment of the main tea product. Because the items are sold together for a single price and do not meet the criteria for a composite supply under Section 2(30) of the CGST Act, they fall under the definition of a mixed supply per Section 2(74). Tax liability is determined under Section 8(b) of the CGST Act, which mandates applying the highest rate of tax among the supplies in the bundle.
Provisions relied on
- Section 2(30) of the CGST Act, 2017
- Section 2(74) of the CGST Act, 2017
- Section 2(90) of the CGST Act, 2017
- Section 8(b) of the CGST Act, 2017
For the practitioner
This ruling clarifies that promotional bundling of non-ancillary products for a single price is treated as a **Mixed Supply**. Practitioners can use this to advise clients that such bundles attract the highest tax rate of the constituent items. It does not provide a definitive HSN rule for cases where tax rates differ, other than referencing the highest-rated item.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/1-jivraj_tea.pdf
Legibility of the scan, as read: high.
Prepared 13-10-2026.
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