ATO Interpretative Decision

ATO ID 2004/143

Goods and Services

GST and spiced chickpeas as savoury snack food
FOI status: may be released

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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you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed.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 spiced chickpeas as savoury snack food?

Decision

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.

Facts

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.

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 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.

Date of decision: 26 September 2002

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   Division 38
   section 38-2
   section 38-3
   section 38-4
   paragraph 38-3(1)(c)
   paragraph 38-4(1)(a)
   Division 40
   Schedule 1 clause 1
   Schedule 1 clause 1 table item 16

Keywords
Goods and services tax
GST food
Food for human consumption
GST supplies and acquisitions
Taxable supply

Business Line: GST

Date of publication: 13 February 2004

ISSN: 1445-2782

history

	Date:	Version:
You are here →	26 September 2002	Original statement
	3 February 2006	Archived

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