1 Is the supply of the specified products (the Products) a taxable supply under section 9-5 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act)?
1 Yes. This ruling applies for the following period: From dd/mm/yyyy to dd/mm/yyyy
You have been registered for GST since dd/mm/yyyy. You sell the Products frozen. You provided details of the Products' packaging and labelling. The Products are made from list of ingredients supplied. The Products are stored and served frozen. The Products do not need any additional ingredients to be ready for consumption. Although the Products are designed to be served with other food, they are capable of being consumed on their own. You sell the Products to cafés and not directly to consumers. You promote the Products on your website, Facebook, and Instagram. You provided the manufacturing process flow chart for the Products. You commenced importing the Products in mm/yyyy. You have been charging GST on the sale of the Products to date.
A New Tax System (Goods and Services Tax) Act 1999 section 9-5 A New Tax System (Goods and Services Tax) Act 1999 section 38-2 A New Tax System (Goods and Services Tax) Act 1999 section 38-3 A New Tax System (Goods and Services Tax) Act 1999 section 38-4 A New Tax System (Goods and Services Tax) Act 1999 Schedule 1, item 29
Summary We consider that the Products are frozen XX or XX XX products and therefore covered by item XX in the table in clause X of Schedule X to the GST Act (item XX). As such, the sale of the Products is excluded from being GST-free by the operation of paragraph 38-3(1)(c) of the GST Act. The sale of the Products therefore is a taxable supply under section 9-5 of the GST Act. Detailed reasoning Section 9-5 of the GST Act provides that you make a taxable supply if the supply meets the following conditions: (a) you make the supply for consideration (b) the supply is made in the course or furtherance of an enterprise that you carry on (c) the supply is connected with Australia, and (d) you are registered, or required to be registered for GST. However, the supply is not a taxable supply to the extent that it is GST-free or input taxed. Your supply of the Products meets the requirements of paragraphs 9-5(a) to 9-5(d) of the GST Act. Additionally, the supply of the Products is not input taxed. Therefore, what is left to determine is whether the supply of the Products is GST-free.
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). The Products are food for human consumption and therefore meet 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 that is specified in the table in clause 1 of Schedule 1 to the GST Act (Schedule 1). In the previous food classification cases including Lansell House Pty Ltd v Commissioner of Taxation [2010] FCA 329, and Lansell House Pty Ltd v Commissioner of Taxation [2011] FCAFC 6 ( Lansell House 2011)
, the Courts have held that classification decisions for GST purposes are questions of fact and degree, a matter of impression and a combination of fact-finding and evaluative judgment. The question to be answered is whether the product at issue comes within the genus, class or description of a product specified in Schedule 1. Consistent with previous food classification decisions, on the meaning of the words 'food of a kind' in paragraph 38-3(1)(c) of the GST Act, in Simplot Australia Pty Limited v Commissioner of Taxation [2023] FCA 1115, the Court said that effect needs to be given to all the words. The Court agreed with the findings in Cascade Brewery v Commissioner of Taxation [2006] FCA 821 that the words 'of a kind' are words of expansion rather than limitation, and the finding in Lansell House 2011 , that the use of the words 'of a kind' in paragraph 38-3(1)(c) of the GST Act adds further generality to the description of the items specified in Schedule 1. The Court also noted that a food does not need to be specified in Schedule 1, it is sufficient if the food is 'of a kind specified'.
In this case, the 'XX CC food' category in Schedule X is relevant for consideration. Specified in this category are the following items: • Table supplied illustrating Schedule X. The Products are made by mixing XX, XX, XX, XX and XX. The Products are sold in frozen state. The products are served frozen. The Products do not need any additional ingredients to be ready for consumption. Although the Products are designed to be served with other food, they are capable of being consumed on their own. Taking the characteristics of the products into account, we consider that the Products are of a kind of XX XX XX XX products and therefore covered under item XX. As the Products are of a kind specified in Schedule X, they are excluded by paragraph XX of the GST Act from being GST-free under section XX of the GST Act. The supply of the Products therefore is a taxable supply as it meets all the requirements of section 9-5 of the GST Act.