Introduction:
The GST Act came in force from 1st July, 2017. There were many interpretation issues with respect to the definitions, glossary and terms use in the law. Since, such definitions were adopted from various legacy laws in India prior to GST; such as Service Tax, State VAT, Central Excise Act, Luxury Tax, Entertainment Tax, etc. it was difficult to make applicable one definition for different sectors. Hence, some modifications from existing definitions were made. Therefore, it was important to established a nexus of the terms used in the GST definitions. The definition discussed here is”Principal Supply”.
So what do you mean by “Principal Supply”?
Section 2(90) of CGST Act, 2017 – “principal supply” means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary;
Conclusion:
A principal supply is a supply of goods and services and constitutes the predominant element of a composite supply. Any other supply forming part of such a composite supply is ancillary supply. Thus, the nature of supply can help in determining which part of a composite supply is the principal supply.