Tea Sold With Spoons, Cups In Single Pack Attracts 18% GST, Not 5%: Gujarat AAR

The Gujarat Authority for Advance Ruling (AAR) has held that tea sold with accessories such as stainless steel spoons, plastic spoons and glass tea cups in a single retail pack attracts GST at 18%. It classified these combinations as mixed supplies rather than composite supplies, making them taxable at the highest rate applicable to any item in the pack.

A two-member authority comprising Member (SGST) Sushma Vora and Member (CGST) Vishal Malani observed that tea and the accessories were not naturally bundled and could be supplied independently.

It held, “Thus, all the ingredients of a mixed supply are present in the supply made by the applicant. Therefore, we hold that supply of the various types/packages of tea along with stainless steel spoon, plastic tea spoon, plastic honey spoon, glass tea cup and wooden honey dipper will be treated as mixed supply accordingly.”

The authority was considering an application filed by Jivraj Tea International Private Limited, which manufactures and sells black tea, green tea and herbal tea. The company proposed to sell these products in retail packs containing accessories such as stainless steel spoons, plastic tea spoons, glass tea cups and wooden honey dippers.

The company argued that the accessories were selected based on their functional suitability and consumer usage patterns. Spoons were intended to facilitate tea preparation, wooden honey dippers to help consumers add honey and glass tea cups to enable convenient consumption.

It submitted that the accessories were incidental to the principal supply of tea and would not be independently advertised, marketed, or sold. It also contended that the entire retail price was attributable to the tea, with no separate value assigned to the accessories.

Rejecting this argument, the authority found that consumers would not ordinarily expect spoons, tea cups or honey dippers to accompany tea. These accessories were also independently available in the market and could be supplied separately.

The authority further observed that the accessories were not integral to the supply of tea. Packing them together for a single price did not make the combination a composite supply.

Under Section 8(b) of the CGST Act, a mixed supply is taxed at the highest rate applicable to any item in the combination. Accordingly, packs containing stainless steel spoons, plastic tea spoons, plastic honey spoons, or glass tea cups attract 18% GST, while combinations containing wooden honey dippers attract 5%.

Applicant's Representatives: Chintan Shah, Chartered Accountant, and Manish Shah, Advocate