22 November 2000 GST/HST Ruling 13508 - Application of the GST/HST to the Supply of Parenteral and Enteral Nutritional Solutions

Dear XXXXX

Thank you for your letter of March 6, 2000 (with attachments), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the product known as XXXXX described below.

Statement of Facts

Our understanding of the facts is as follows:

1. XXXXX is a highly concentrated liquid mixture of complex nutrients in a solution that is used as a substitute for orally ingested solid food and beverages by individuals who are unable to consume food or beverages orally.

2. XXXXX is designed to bypass a persons normal digestion to deliver the essential nutrients required to sustain life. The usual route for administering XXXXX is intravenously (parenterally) although it can also be administered through the gastro-intestinal tract (enterally).

3. XXXXX is administered to individuals by hospitals and home care organizations under a practitioner's order.

4. XXXXX can be purchased directly by individuals under a practitioner's order through pharmacies.

5. XXXXX is produced in client specific formulations by XXXXX as prescribed by doctors based on individual medical circumstances and nutritional requirements.

6. Pharmacists review medical prescriptions and supervise the preparation of XXXXX solutions to ensure the resulting mixture is chemically and physically compatible to the individual.

Ruling Requested

Whether XXXXX is zero-rated pursuant to Section 1 of Part III of Schedule VI to the Excise Tax Act (ETA).

Ruling Given

Based on the facts set out above, we rule that XXXXX does not fall within the scope of Section 1 of Part III of Schedule VI to the ETA.

This ruling is subject to the general limitations and qualifications outlined in section 1.4 of Chapter 1 of the GST/HST Memoranda Series. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal; that there are no relevant changes in the future to the Excise Tax Act, or to our interpretative policy; and that you have fully described all necessary facts and transaction(s) for which you requested a ruling.

Explanation

XXXXX is designed and produced to assist in the treatment or mitigation of a physical condition, disorder or disease. The Journal of Parenteral and Enteral Nutrition, XXXXX enclosed as 'Exhibit C' of your submission, lists several diseases and conditions that XXXXX is utilized in treating or mitigating. Some of these are organ failure [liver, kidney, pancreas, respiratory], intestinal dysfunction/failure, cancer, AIDS and eating disorders.

Furthermore, XXXXX can only be acquired through a pharmacy, hospital or home care organization on the order of a practitioner.

Although the ETA does not define the terms "food" or "beverages", the terms are understood and interpreted by the Department to have their common everyday meaning. Solutions designed to be administered intravenously are not considered food or beverages under Section 1 of Part III of Schedule VI to the ETA. XXXXX is not a zero-rated supply pursuant to Section 1 of Part III of Schedule VI to the ETA.

Should you have any further questions or require clarification on the above matter, please contact me at (613) 952-9218.

Yours truly,

Kevin W. Smith
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate