ATO ID 2002/231: GST and reconstituted juices consisting principally of noni juice
Date of decision: 21 December 2001
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 a reconstituted fruit juice product consisting principally of noni juice?

Decision
Yes, the entity is making a GST-free supply under section 38-2 of the GST Act when it supplies a reconstituted fruit juice product consisting principally of noni juice.

Facts
The entity is a food supplier. The entity is supplying a reconstituted fruit juice product consisting principally of noni juice (noni juice). Noni juice is the juice pressed from the fruit of the noni tree. The botanical name of the noni tree is Morinda citrifolia. The noni juice is reconstituted and combined with two other juices. The noni juice is at least 90 per cent by volume of juices of fruits. Testing is performed on noni juice before and after it has been reconstituted, and the bottled juice has the same scientific properties as the juice extracted from the fruit. The noni juice is promoted as having numerous nutritional benefits. The noni juice is not promoted as having any medicinal benefits. 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). The meaning of the term beverage for the purposes of the GST Act is determined by subsection 38-4(2) of the GST Act. This section provides that beverage includes water . As this definition does not assist in determining whether noni juice is a beverage for the purposes of the GST Act, it is necessary to consider how the courts have defined 'beverage'. Lockhart J in Bristol-Myers Co. Pty. Ltd. v. Federal Commissioner of Taxation (1990) 21 ATR 417 describes 'a beverage' as 'a drink of any kind'. Lockhart J goes on to say that: '..."Drink" when used as a noun is defined in slightly different ways by dictionaries, but in my view it means any liquid which is swallowed to quench thirst or for nourishment.' Therefore, a beverage is considered to be any liquid that is swallowed for nourishment or to quench thirst. A liquid providing nourishment will sustain life by assisting in growth or providing energy. A nutritional purpose may be contrasted with a medicinal purpose, which arises where a liquid is provided for the treatment of disease or has curative or remedial purposes. Noni juice is a liquid that is swallowed for nourishment. Furthermore, the product is not promoted as having any medicinal purposes. Therefore, the noni juice is a beverage for human consumption as per 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 noni juice is item 12 of Schedule 2 (Item 12), which provides that non-alcoholic non-carbonated beverages, that consist of at least 90 per cent by volume of juices of fruits or vegetables, are GST-free. Noni juice is both non-alcoholic and non-carbonated, and it consists of at least 90 per cent by volume of the juice of fruits. As the reconstituted noni juice has the same properties as the juice when it is initially extracted from the fruit, the reconstituted juice is considered to be the same product as freshly extracted juice and is covered by Item 12. In addition, the supply of noni juice does not fall within any of the other 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 noni juice.

Legislative references: A New Tax System (Goods and Services Tax) Act 1999 section 38-2 section 38-3 paragraph 38-3(1)(d) section 38-4 paragraph 38-4(1)(c) subsection 38-4(2) Schedule 2 clause 1 Schedule 2 clause 1 table item 12
Case references: Bristol-Myers Company Pty Ltd v. Federal Commissioner of Taxation - 27 June 1990 90 ATC 4553 (1990) 23 FCR 126 21 ATR 417
Subject references: GST free GST food GST beverages