ATO ID 2004/497: GST and frozen coconut juice
Date of decision: 26 May 2003
Business line: Indirect Tax

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 frozen coconut juice?

Decision
Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies frozen coconut juice.

Facts
The entity is a food supplier. The entity supplies frozen coconut juice. The frozen coconut juice is supplied as a beverage. It is supplied frozen as it spoils quickly in its unfrozen state. The product is designed to be thawed prior to drinking. The ingredients of the drink are coconut juice (greater than 90% by volume), water, sugar and coconut meat. The frozen coconut juice is not supplied for consumption on the premises from which it is supplied. The entity is registered for goods and services tax (GST).

Reasons for decision
Summary: 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 beverages for human consumption (paragraph 38-4(1)(c) of the GST Act). Even though the coconut juice is supplied frozen it is designed to be thawed prior to drinking. As such, it is a beverage for human consumption. Therefore, the frozen coconut juice comes within the meaning of food contained in section 38-4 of the GST Act as a beverage for human consumption. 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 product 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. Coconuts are the fruit or seeds of the coco palm. Accordingly, coconut juice is considered to be the juice of a fruit. Furthermore, the coconut juice is non-alcoholic, non-carbonated and consists of at least 90% by volume of juice and therefore is covered by Item 12. In addition, frozen coconut juice does not fall within any of the 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 frozen coconut juice.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 38-2 section 38-3 paragraph 38-3(1)(c) section 38-4 paragraph 38-4(1)(a) paragraph 38-4(1)(c) Schedule 2 Schedule 2 clause 1 item 12
Subject references: Goods and services tax GST free GST food GST beverages GST favourable decision