Issue
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 parathas?
Decision
Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies parathas.
Facts
The entity is a food supplier. The entity supplies parathas in a plain variety, onion variety and a variety with a savoury filling. Parathas are a type of flat bread. The ingredients of all varieties of the paratha are flour, oil, margarine, water and salt. The onion paratha also has onion. The savoury filled paratha contains lentils and vegetables.
The product is not sold hot and is not for consumption on the premises from which it is supplied.
The entity is registered for goods and services tax (GST).
Reasons for Decision
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 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). Parathas satisfy the definition of food in paragraph 38-4(1)(a) of the GST Act as it is food for human consumption.
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 of the GST Act (Schedule 1).
Item 27 in Schedule 1 (Item 27) specifies 'bread (including buns) with a sweet filling or coating'. Parathas are a type of flat bread and its ingredients include flour, oil, margarine, water and salt, with vegetables in some varieties. The parathas have no sweet filling or coating. Therefore, parathas are not food of a kind specified at Item 27 and are not excluded from being a GST-free supply by paragraph 38-3(1)(c) of the GST Act.
In addition, the supply of parathas 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 supplies parathas.