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]
Date: December 15, 2020
Case Number: 203737
Dear [Client]:
Subject: GST/HST RULING
Application of GST/HST to Supplies of Samosas, Pakoras, Namak Para, and Boondi
Thank you for your letter of October 21, 2019, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to supplies of samosas […], pakoras […], namak para […], and boondi […].
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
Our understanding of the facts is as follows:
1. You have described [...][the Samosas] as a fried dish with a savory filling, such as potatoes, onions, peas, meat, or lentils, which is normally shaped in the form of a triangle.
2. As per your submission, it is our understanding that […][the Samosas are] prepared in your kitchen and then fried in a large batch in the morning. Throughout the day, they are sold in various quantities for takeout only. Where required, another large batch is prepared and fried.
3. You have indicated that [the Samosas are] not reheated or kept in a heated cabinet.
4. [The Samosas are] also prepared and sold uncooked or half-fried (not suitable for immediate consumption) to customers.
5. […]
6. […][The Pakoras are] prepared using ingredients such as onion, eggplant, potato, spinach, cauliflower, or chilli pepper. They are dipped in a batter made from gram flour then deep-fried.
7. You have indicated that [the Pakoras are] […][prepared and fried x times per week]. […]. […], in a phone conversation […], it was confirmed that [the Pakoras are] […] always served hot and fresh. Furthermore, [you indicated] […] that supplies of […][the Pakoras] are always made fresh.
8. You have described [...][the Namak Para] as a crunchy savory snack eaten in the Indian subcontinent. Furthermore, with respect to texture, you have indicated that [the Namak Para] consists of ribbon-like strips of pastry with cumin seeds.
9. [The Namak Para] is deep-fried in oil. The appearance, taste, and texture can be compared to that of samosa pastry.
10. […]
11. You have described […][the Boondi] as a batter of chickpea flour that is seasoned with salt and cumin seeds, and fried in oil in droplet form.
12. You have indicated that [the Boondi] is not a ready to eat snack but instead is popularly used to prepare raita. You explain that raita made with [the Boondi] typically contains curd (yogurt), [the Boondi] (which is soaked in water to make it soft, then sieved), and seasonings of salt, chilli, and other spices.
13. […]
14. [The Boondi] is prepared and fried […][y times per week]. They are not sold hot or re-heated and are sold by weight.
RULING REQUESTED
You would like to know whether supplies of [the Samosas], [the Pakoras], [the Namak Para], and [the Boondi] are zero-rated for GST/HST purposes.
RULING GIVEN
Based on the facts set out above, we rule that supplies of [the Samosas] in a frozen or half-fried state would be zero-rated for GST/HST purposes. Furthermore, we rule that supplies of [the Samosas] in a cooked state would be excluded from zero-rating under paragraph 1(o) and thus would be subject to the full rate of GST/HST.
We further rule that supplies of [...][the Pakoras] would be excluded from zero-rating under paragraph 1(o) and thus would be subject to the full rate of GST/HST.
With respect to [the Namak Para], we rule that supplies of [the Namak Para] would be excluded from zero-rating under paragraph 1(f) and thus would be subject to the full rate of GST/HST.
Finally, with respect to [the Boondi], we rule that supplies of [the Boondi] would be zero-rated for GST/HST purposes.
EXPLANATION
Section 1 of Part III of Schedule VI to the ETA zero-rates supplies of food or beverages for human consumption, including sweetening agents, seasonings and other ingredients to be mixed with or used in the preparation of such food or beverages, other than supplies excluded from zero-rating by way of paragraphs (a) to (r) of that section.
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.
With respect to [the Samosas], [you assert they are][…] sold hot and fresh. […], supplies of [the Samosas], when sold in a cooked state, are excluded from zero-rating and are subject to GST/HST at the full-rate. Supplies of [the Samosas] sold in an uncooked or half-fried state are zero-rated for GST/HST purposes.
With respect to [the Pakoras], [we understand][…] that supplies of [the Pakoras] are always made fresh […] [and] always served hot and fresh. Again, in evaluating the tax status of [the Pakoras] in light of the commentary provided above, supplies of [the Pakoras] are also excluded from zero-rating under paragraph 1(o) and therefore are subject to GST/HST at the full-rate.
Paragraph 1(f) of Part III of Schedule VI excludes from zero-rating the following:
"chips, crisps, puffs, curls or sticks (such as potato chips, corn chips, cheese puffs, potato sticks, bacon crisps and cheese curls), other similar snack foods or popcorn and brittle pretzels, but not including any product that is sold primarily as a breakfast cereal".
Paragraph 56 of GST/HST Memorandum 4.3, Basic Groceries, (GST/HST Memo 4.3) outlines the factors that are used to determine if a particular product is similar to a chip, crisp, puff, curl or stick as described under paragraph 1(f) of Part III of Schedule VI. These factors include the properties of the product (ingredients, flavours, texture, cooking process and appearance), its labelling, its packaging, and its marketing.
The properties, labelling, packaging, and marketing elements of [the Namak Para], considered together, provide an overall indication that [the Namak Para] is a snack food similar to those listed in paragraph 1(f) of Part III of Schedule VI to the ETA. These include [the Namak Para]’s salty and savoury taste, its crispy texture, its appearance (small, bite-sized pieces resembling ribbon strips), its cooking process (deep-fried) and product marketing identifying [the Namak Para] as a snack. Therefore, supplies of [the Namak Para] are excluded from zero-rating under paragraph 1(f) and are subject to GST/HST at the full-rate.
As [the Boondi] is an ingredient that is not excluded under any of the exclusionary paragraphs (a) to (r) of section 1 of Part III of Schedule VI, supplies of [the Boondi] are zero-rated, or subject to the GST/HST at the rate of 0%.
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, […]. 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
Senior Rulings Officer
Basic Groceries and Recaptured Input Tax Credits Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate
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