28 May 2003 GST/HST Ruling 44086 - Application of the GST/HST on Certain Tea Beverages

Dear XXXXX:

Thank you for your letter XXXXX, (with attachments and samples), concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the transaction(s) described below.

Statement of Facts

Our understanding of the facts, the transaction(s), and the purpose of the transaction(s) is as follows:

1. The purpose of your letter is to request a ruling on behalf of your client, XXXXX, regarding the GST/HST status of the following tea beverages (the "Teas"):

XXXXX

2. Each of the Teas is comprised of concentrated tea leaves and extracts, which are sold on a XXXXX basis in quantities exceeding a single serving.

3. With the exception of XXXXX, the Teas are also manufactured in a "tea-bag" format, consistent with their intended consumption as teas. The XXXXX Tea product is more like an instant tea, with it being produced in a powder format so that it may also be consumed as an iced tea.

4. XXXXX is a herbal tea beverage, identical to herbal teas found in most grocery stores. Each tea bag XXXXX is comprised of XXXXX. It is manufactured in a "tea-bag" format, and the directions on the packaging confirm its use as a tea beverage, indicating that the tea bags are to be steeped in hot water.

5. The Canada Customs and Revenue Agency (CCRA) previously ruled XXXXX to be zero-rated as set out in a XXXXX, ruling.

6. Each of the three other XXXXX Herbal Teas is identical to the XXXXX product, except in terms of ingredients.

7. XXXXX is composed of XXXXX.

8. Each bag of XXXXX is comprised of XXXXX.

9. Each tea bag of XXXXX is comprised of XXXXX.

10. Each of these other Teas is again manufactured in a "tea-bag" format, and the directions for each confirm that the tea bags are to be steeped in hot water.

11. The CCRA previously ruled each of XXXXX and XXXXX to be zero-rated as set out in a XXXXX ruling.

12. XXXXX is marketed as an all natural herbal tea beverage. It is made from XXXXX. The directions on the packaging are consistent with the product being a tea type beverage, indicating that each sachet is to be mixed with 240 ml of water. There are no other directions or recommendations associated with the product.

13. The CCRA previously ruled XXXXX to be zero-rated as set out in a XXXXX, ruling.

Transaction(s)

The Teas are sold on a XXXXX basis in quantities exceeding a single serving.

Ruling Requested

Each of the Teas is zero-rated pursuant to Section 1 of Part III of Schedule VI to the Excise Tax Act.

Ruling Given

Based on the facts set out above, we rule that each of the Teas is zero-rated pursuant to Section 1 of Part III of Schedule VI to the Excise Tax Act.

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.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-7909.

Yours truly,

Gunar Ozols
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate