GST and spiced chickpeas as savoury snack food

Is the entity, a food supplier, making a GST-free supply under section 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it supplies spiced chickpeas as savoury snack food?

No, the entity is not making a GST-free supply under section 38-2 of the GST Act when it supplies spiced chickpeas as savoury snack food.

The entity is making a taxable supply under section 9-5 of the GST Act.

The entity is a food supplier. The entity supplies spiced chickpeas. The entity supplies the spiced chickpeas as savoury snack food.

Chickpeas are seeds from leguminous plants. The chickpeas are soaked, washed and then fried with the addition of spices.

The entity is registered for goods and services tax (GST). The supply satisfies the other positive limbs of section 9-5 of the GST Act.

A supply of food is GST-free under section 38-2 of the GST Act if the product satisfies the definition of food in section 38-4 of the GST Act and the supply is not excluded by section 38-3 of the GST Act.

Food is defined in section 38-4 of the GST Act to include food for human consumption (paragraph 38-4(1)(a) of the GST Act). The spiced chickpeas are food for human consumption and therefore satisfy the definition of food in paragraph 38-4(1)(a) of the GST Act.

However, paragraph 38-3(1)(c) of the GST Act provides that a supply of food is not GST-free if it is food of a kind specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1).

Item 16 of Schedule 1 (Item 16) lists seeds or nuts that have been processed or treated by salting, spicing, smoking or roasting, or in any other similar way.

Chickpeas are seeds from leguminous plants. The chickpeas are soaked, washed and then fried with the addition of spices. Accordingly, the spiced chickpeas are covered by Item 16 and a supply of spiced chickpeas is therefore, excluded from being a GST-free supply by the operation of paragraph 38-3(1)(c) of the GST Act.

The entity is registered for GST and the supply satisfies the other positive limbs of section 9-5 of the GST Act. Furthermore, the supply is neither GST-free under any other provision of Division 38 of the GST Act nor input taxed under Division 40 of the GST Act. Therefore, the entity is making a taxable supply under section 9-5 of the GST Act when it supplies spiced chickpeas as savoury snack food.