GST and green barley powder

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 sells green barley powder?

Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it sells green barley powder.

The entity is a food supplier. The entity sells green barley powder. Green barley powder is a vegetable product consisting of dried and crushed young barley plants. It is supplied for consumption by sprinkling on food or adding to liquids.

The entity is registered for goods and services tax (GST).

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 from being GST-free 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 (whether or not requiring processing or treatment) (paragraph 38-4(1)(a) of the GST Act). Although green barley powder is sometimes used as an ingredient in food or consumed by adding to a beverage, it is generally supplied as a food in its own right and therefore satisfies the definition of food in paragraph 38-4(1)(a) of the GST Act.

However, under paragraph 38-3(1)(c) of the GST Act, 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). Green barley powder is not food of a kind specified in Schedule 1.

The supply of green barley powder does not fall within any of the other exclusions in section 38-3 of the GST Act. Therefore, the entity is making a GST-free supply under section 38-2 of the GST Act when it sells green barley powder.