Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 186381
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
GST/HST status of samosas
Thank you for your letter of August 15, 2017, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to the supply of cooked and uncooked samosas (the Product) by […] (the Company).
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
We understand the following:
1. The Company is a GST/HST registrant with the business number noted above.
2. The Product is described as an ethnic food item that is baked or fried, with a savoury filling such as potatoes, onions, peas, lentils, macaroni, noodles, cheese, lamb, chicken, beef or pork.
3. The Product is primarily sold through three channels, namely: sold to hospitals uncooked and either frozen or not frozen; sold to schools in bulk and refrigerated (the schools would have to reheat before selling to students); and sold at the […][venue] both in an uncooked state and a warm and fresh state.
4. At the [venue], the Product is normally sold in quantities greater than 6 to individual customers.
5. The Company has been operating under the assumption that the Product should be treated in the same manner as donuts, or more specifically, zero-rated when sold in quantities of 6 or more.
6. The Company has confirmed that [#] insulated pizza delivery bags are on site at the [venue] to keep the cooked samosas warm.
7. The Company has also confirmed that a heat lamp is utilized at the [venue] to keep the cooked samosas warm.
RULING REQUESTED
You would like to know whether supplies of the Product, sold both in cooked and uncooked states, are zero-rated or taxable at the full rate of GST/HST.
RULING GIVEN
Based on the facts set out above, we rule that supplies of the Product in a frozen or uncooked state, whether it be sales to schools, hospitals, or at the [venue], would be zero-rated for GST/HST purposes. Furthermore, we rule that supplies of the Product in a cooked state and sold fresh, irrespective of the quantity sold, would be excluded from zero-rating under paragraph 1(o) and thus would be subject to the full rate of GST/HST.
EXPLANATION
One of the intentions of Part III of Schedule VI to the ETA is to exclude from zero-rating convenience foods or foods supplied for immediate consumption. A food item that is supplied and heated for consumption would be considered a convenience item as the purchaser does not have to do any preparation and the item is ready for immediate consumption.
Paragraph 1(o) excludes supplies of food or beverages heated for consumption.
We have differentiated between food heated for consumption and food that is hot as a result of the cooking process. Food that is hot as a result of the cooking process, while still hot, may be zero-rated if it is hot only as a result of the cooking process and has been chosen randomly by the purchaser. In determining whether a food item has been heated for consumption or whether it is hot as a result of the cooking process, the specific facts of each case must be considered.
Supplies of the Product made at the [venue], where the Product is sold in a cooked state, would be excluded from zero-rating under paragraph 1(o) as goods heated for consumption and thus, would be subject to the full rate of GST/HST. The presence of a heat lamp and [#] insulated pizza delivery bags at the [venue], used to maintain the heat of the fresh cooked Product, supports the conclusion that supplies of the Product are intended to be consumed while the Product is warm and fresh.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (CRA) is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 905-721-5218. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Zubair Patel
Basic Groceries and Recaptured Input Tax Credits Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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