Tea Packed With Spoons or Glass Cups Is Mixed Supply Taxable at 18%: AAR Gujarat

The Gujarat Authority for Advance Ruling held that tea bundled with accessories at a single price is not naturally bundled, so the highest rate applies, which is 5% only with a wooden honey dipper.

The Gujarat Authority for Advance Ruling has held that tea packed in a single retail unit with a steel or plastic spoon, glass cup or honey spoon is a mixed supply under Section 2(74) of the CGST Act, taxable under Section 8(b) at 18%, the rate applicable to the accessory. Where the accessory is a wooden honey dipper, which itself attracts 5%, the pack is taxed at 5%. [In Re: Jivraj Tea International Private Limited, 2026-juristway.com-3270-AAR(Gujarat)-GST]

Sushma Vora, Member (SGST), and Vishal Malani, Member (CGST), answered 19 questions from the Surat-based manufacturer, which proposed to sell black, CTC, flavoured, green and herbal tea packs with such items to familiarise customers with preparing tea. It said the pack would carry a single MRP and a single invoice line describing the supply as tea, with the accessory supplied without separate consideration, not sold separately and of insignificant value, making tea the principal supply of a composite supply.

The Bench applied the indicators of natural bundling in CBIC Flyer No. 4 dated 5 Aug 2019 and found none met. Customers do not expect such items when buying tea, most similar businesses do not bundle them, and the tea can be enjoyed without them. It noted: “It is only for testing the market that they have decided to bunch various types/packages of tea with the aforementioned items.” The accessories were not integral to the supply, so the bundle was not a composite supply under Section 2(30).

Turning to Section 2(74), the Bench found every element of a mixed supply present: the items were not naturally bundled, were sold for a single price, were available separately in the market and were not dependent on each other. Under Section 8(b), a mixed supply is treated as a supply of the item attracting the highest rate of tax.

Under Notification No. 09/2025-Central Tax (Rate), the tea attracts 5%. Stainless steel spoons (HSN 82159900), plastic tea and honey spoons (HSN 39241090) and glass tea cups (HSN 70139900) attract 18%, and wooden honey dippers (HSN 44199090) attract 5%. Fifteen of the proposed bundles were therefore held taxable at 18%, and the three green and herbal tea packs with a wooden honey dipper at 5%.

On the HSN code, the Bench ruled that the HSN code of the item attracting the highest rate is to be mentioned, and where both items carry the same rate, the HSN code of either may be used.

2026-juristway.com-3270-AAR(Gujarat)-GST