What are GST Rate if value of mineral is less than cost of freight in long distance consignments

By | August 2, 2017
(Last Updated On: August 2, 2017)

In case of an FOR contract for supply of mineral from the mine to the buyer, it is a composite supply where
the consideration will be inclusive of the transportation cost .Therefore, GST on forward charge will be payable by
the supplier of the mineral and credit will be available to the buyer if otherwise available. The supplier of the mineral will also pay tax on reverse charge basis on the freight charged by the GTA and the credit of the same will be available to the supplier of the mineral.

Question . Will the situation as mentioned above be different if the value of mineral is less than the cost of freight in long distance consignments?

Answer: In the aforesaid example relating to FOR contract, the supply under the contract shall be classified
as ‘composite supply’ where there is a principal supply and other supplies are naturally bundled and supplied
in conjunction with each other in the ordinary course of business. The GST rate of principal supply shall be
applicable in this case i.e. GST rate as applicable to the mineral.

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