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ATO Interpretative Decision

ATO ID 2001/659 (Withdrawn)

Goods and Services Tax

GST and hot sugar cane juice
FOI status: may be released
CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

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 sugar cane juice that is heated and sold for consumption away from the premises?

Decision

No, the entity is not making a GST-free supply under section 38-2 of the GST Act when it supplies sugar cane juice that is heated and sold for consumption away from the premises. The entity is making a taxable supply under section 9-5 of the GST Act.

Facts

The entity is a food supplier. The entity supplies heated sugar cane juice for consumption away from its premises.

The hot sugar cane juice is non-alcoholic, non-carbonated, consists of at least 90% by volume of juice and is derived from sugar cane, which is a grass.

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.

Reasons for Decision

A supply of food is GST-free under section 38-2 of the GST Act if it satisfies the definition of food in section 38-4 of the GST Act and it does not come within any of the exclusions in section 38-3 of the GST Act.

The meaning of food in section 38-4 of the GST Act includes beverages for human consumption (paragraph 38-4(1)(c) of the GST Act). Hot sugar cane juice is a beverage for human consumption. Therefore, the hot sugar cane juice comes within the meaning of food contained in paragraph 38-4(1)(c) of the GST Act.

However, under paragraph 38-3(1)(d) of the GST Act, a supply of a beverage is not GST-free unless it is a beverage of a kind specified in the table in clause 1 of Schedule 2 to the GST Act (Schedule 2).

Of most relevance to this situation is item 12 of Schedule 2 (Item 12), which provides that non-alcoholic non-carbonated beverages, that consist of at least 90% by volume of juices of fruits or vegetables, are GST-free. Clause 3 of Schedule 2 provides that for the purposes of Item 12, herbage is treated as vegetables.

The word 'herbage' is not defined in the GST Act. Therefore, it is necessary to rely on the ordinary meaning of that term. The Macquarie Dictionary (1997) defines herbage as '1. non-woody vegetation 2....' As sugar cane is a grass, which is a type of non-woody vegetation, sugar cane is considered to be a type of herbage. Accordingly, the supply of sugar cane juice that is non-alcoholic, non-carbonated and consists of at least 90% by volume of juice, is covered by Item 12 and is GST-free under section 38-2 of the GST Act.

However, paragraph 38-3(1)(b) of the GST Act provides that hot food for consumption away from the premises from which it is supplied is not GST-free. Therefore, as the hot sugar cane juice is considered to be food and is supplied for consumption away from the premises from which it is supplied; the supply of the hot sugar cane juice is not GST-free under section 38-2 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 Division 38 of the GST Act nor input taxed under Division 40 of the GST Act. Therefore, the supply of the hot sugar cane juice for consumption away from the premises from which it is supplied, is a taxable supply under section 9-5 of the GST Act

Date of decision:  13 September 2001

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   Division 38
   section 38-2
   section 38-3
   paragraph 38-3(1)(b)
   paragraph 38-3(1)(d)
   section 38-4
   paragraph 38-4(1)(c)
   Division 40
   Schedule 2
   Schedule 2 clause 1
   Schedule 2 clause 1 table item 12
   Schedule 2 clause 3

Related ATO Interpretative Decisions
ATO ID 2001/658

Other References:
The Macquarie Dictionary, 1997, 3rd Edition, The Macquarie Library Pty Ltd, New South Wales

Keywords
Goods & services tax
GST free
GST beverages
Ingredients for beverages
GST supplies & acquisitions
Taxable supply

Business Line:  GST

Date of publication:  30 November 2001

ISSN: 1445-2782

history
  Date: Version:
  13 September 2001 Original statement
You are here 14 October 2005 Archived

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