29 March 2001 GST/HST Interpretation 8385/HQR0001991 - Application of the GST/HST to the Supply of Juice Beverage Concentrates

Dear XXXXX:

Thank you for your facsimile of December 8, 1999 concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to various XXXXX products. We note from your facsimile that many of the products you requested an interpretation on are either no longer in production, or not imported into Canada. The only remaining determination is for the above-noted product, XXXXX (the 'product').

Information Provided

From the product bulletin enclosed with your request we have determined the following.

•   The product is a concentrated XXXXX juice.

•   The product comes in XXXXX ml bottles (XXXXX oz.)

•   The product contains citric acid, sodium benzoate and potassium sorbate.

•   The recommended use of the product is to take XXXXX in XXXXX of purified water or juice daily, or drink pure.

•   The product is best taken on an empty stomach.

•   The bulletin states; "Most people drink XXXXX either undiluted or mixed with a fruit juice. It can be applied topically as a moisturizer, XXXXX. Athletes use XXXXX for achy muscles, and you can also use it as a mouthwash; simply gargle."

•   The bulletin lists the benefits of the products as follows:

•   Regenerates cells

•   XXXXX

•   Maintains and moisturizes skin

•   Penetrates to the dermis.

•   Anti-inflammatory, antiviral, antibacterial, antifungal.

•   Good for the digestive tract.

Interpretation Requested

What is the GST/HST status of the product?

Interpretation Given

Based on the information provided, supplies of the product are taxable at 7%, or 15% as applicable.

Explanation

The word 'beverage' is not defined in the Excise Tax Act (ETA). Administratively, a 'beverage' is considered to be a drink that is consumed for pleasure or to quench thirst. Although the product is taken undiluted or mixed with fluids and consumed by drinking, it is our position that the resultant blend is not a beverage within the administrative meaning.

The product is promoted on the basis of the benefits derived from both internal and external use. The benefits derived from use are of a cosmetic or therapeutic nature. For example, the product bulletin lists some of the benefits as "Maintains and moisturizes skin", "XXXXX", "Regenerates cells" and "Good for the digestive tract".

Our analysis indicates that the product is a dietary supplement intended to alter a person's existing state of health or to alter a real or perceived deficiency in a person's diet. This is supported by the manner in which the product is promoted which emphasizes the health aspects of product use.

Dietary supplements are not consumed to alleviate hunger as are foods traditionally considered basic groceries. Examples include alfalfa, yeast, ginseng, lecithin, bee pollen, seaweed or fibre produced in tablet, pill and capsule form as well as in powdered and liquid form. Dietary supplements are not within the scope of Part III of Schedule VI to the ETA and are therefore taxable at 7% (or 15% as applicable).

Based upon the manner in which the product is promoted, it is our position that this product is not a beverage but a dietary supplement. Accordingly, the product is not within the scope of Part III of Schedule VI and is taxable at 7%, or 15% as applicable.

The foregoing comments represent our general views with respect to the subject matter of your letter. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the Canada Customs and Revenue Agency with respect to a particular situation.

Should you have any further questions or require clarification on the above matter, please do not hesitate to 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