Geometry Compass Box Classified as Mixed Supply, Attracts 18% GST: AAR [Read Order]

The Maharashtra Authority for Advance Ruling (AAR) ruled that the supply of a Geometry Compass constitutes a mixed supply under Section 2(74) of the CGST Act, 2017, and is taxable at 18% GST, not a composite supply.

The applicant, Amardeep Udyog, a partnership firm engaged in the trading of stationery products and readymade garments, received a purchase order from BMC dated June 11, 2024, for supplying stationery items to students from Standards 4th to 10th. Among the items to be supplied was a "Geometry Compass Box", described to include a compass, divider, scale, three set squares (30°, 45°, and 60°), a protractor, an eraser, a pencil, and a sharpener.

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The applicant submitted that the supplied product is properly classifiable under HSN 90172010 as mathematical drawing instruments, citing Sr. No. 413 of Notification 1/2017 – Central Tax (Rate), and taxable at 18% GST (9% CGST + 9% SGST). The firm argued that the box is a set of mathematical tools and should not be treated merely as a “geometry box” under HSN 73102910, which BMC used in its purchase order. The applicant explained that classification should reflect the nature and utility of the goods, rather than the container's material composition.

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The jurisdictional officer submitted that the product, described as a "geometry compass box", fits the description under HSN 73100000, which includes metal boxes, and suggested that a lower GST rate may be applicable.

The bench comprising D.P. Gojamgunde and M. Priya Jadhav observed that while the product includes a metal box, it also contains multiple tools, some of which, like pencils and sharpeners, are not typically bundled with mathematical instruments. The AAR observed that consumers may expect a basic geometry box to include certain tools, but the inclusion of items like erasers and sharpeners deviates from a naturally bundled supply.

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Relying on Section 2(74) of the CGST Act, which defines "mixed supply", and guidance from the CBIC’s Education Guide on bundled supplies, the AAR ruled that the product does not qualify as a composite supply, because each item can be bought and sold separately and is not naturally bundled in the ordinary course of trade.

According to Section 8(b) of the CGST Act, the tax rate applicable to a mixed supply is the rate of the item with the highest GST rate. Since the scale in the box (classified under HSN 90178010) attracts 18% GST, the entire supply must be taxed at that rate.

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The AAR ruled that the Geometry Compass Box supplied by M/s Amardeep Udyog qualifies as a mixed supply, classifiable under HSN 90178010, and taxable at 18% GST (9% CGST + 9% SGST).

To Read the full text of the Order CLICK HERE

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