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Edited version of private ruling
Authorisation Number: 1011726294489
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Ruling
Subject: GST and the importation and supply of food
Question 1
Is your supply of the Product GST-free?
Answer
Yes.
Question 2
Is your importation of the Product non-taxable?
Answer
Yes.
Relevant facts and circumstances
You are registered for GST.
You import and then distribute a product (Product).
The Product is not differentiated at importation with respect to its use, that is, the supplier does not indicate how the product should be used.
The Product is sold in grocery shops and is located mainly near lentils and rice products.
It is sold in plain packaging, having no information on the packaging as to how it should be used.
You have supplied examples of food recipes that incorporate the Product as one of the main ingredients.
You have imported the Product which Australian Customs has treated as a taxable importation and for which you have claimed GST credits.
Reasons for decision
Summary
Your supply of the Product is GST-free as a food also making the importation of the Product non-taxable.
Detailed reasoning
1. Is your supply of the Product GST-free?
The only provision in the GST Act that may allow your supply of the Product to be GST-free is as a supply of food.
A supply of food will be GST-free under section 38-2 of the GST Act provided that it does not come within any of the exclusions listed in section 38-3 of the GST Act.
Subsection 38-4(1) of the GST Act defines food for the purposes of section 38-2 of the GST Act. Of the foods defined in this provision, the most relevant to your circumstances, are ingredients for food for human consumption (paragraph 38-4(1)(b)) and goods to be mixed with or added to food for human consumption, including condiments, spices, seasonings, sweetening agents or flavourings (paragraph 38-4(1)(e)).
The Product is not differentiated at importation with respect to its use, that is, the supplier does not indicate how the product should be used. It is also sold in grocery shops in plain packaging and is located near products such as lentils and rice.
You have supplied examples of food recipes that incorporate the Product as one of the main ingredients.
Given these circumstances, we consider that the Product can be used an ingredient for food and consequently it is a food as defined by subsection 38-4(1) of the GST Act. Hence its supply would be GST-free.
Medicinal uses of Betel Leaf
From information provided in your private ruling application, the Product can also be used for medicinal purposes. Please note that where a product is imported to be marketed and sold as a product other than food, the GST treatment of the Product given above does not apply.
2. Is your importation of the Betel Leaf non-taxable?
Section 13-10 of the GST Act provides that an importation is a non-taxable importation if:
· it is a non-taxable importation under Part 3-2 of the GST Act, or
· it would have been a supply that was GST-free or input taxed if it had been a supply (for example, it would be a GST-free supply had the supply been made in Australia).
In your case, your supply of the Product in Australia is GST-free and consequently, its importation is non-taxable under section 13-10 of the GST Act.
Treated as taxable importation
You have imported the Product which Australian Customs (Customs) has treated as taxable and for which you have claimed GST credits. Given these circumstances there is no need for you to reverse this transaction with Customs.
If you do decide to reverse this transaction then it would be necessary for you to make a refund of the GST credits you have claimed to the ATO.