5 December 2005 GST/HST Ruling 58960 - Tofu Dessert

Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.

Dear XXXXX:

Thank you for your letter XXXXX requesting a review of our ruling XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to tofu dessert.

All legislative references are to the Excise Tax Act (the Act) and the regulations therein, unless otherwise specified.

Statement of Facts

A corporation resident of Canada distributes and sells XXXXX different dessert products called XXXXX (the Product) to Canadian resident grocery stores.

1. The XXXXX flavoured tofu dessert products are: XXXXX.

2. The packaging describes the products as a XXXXX with no preservatives and cholesterol free.

3. The Product is packaged in a single container with a mass of XXXXX grams.

4. The Product can be eaten hot or cold.

5. The Product is not frozen and should be refrigerated.

6. The package indicates that the Product can be enjoyed on its own or topped with fresh fruit or blended in smoothies.

7. XXXXX:

•   XXXXX

•   XXXXX

•   XXXXX

•   XXXXX

•   XXXXX

•   XXXXX

In a telephone conversation and in a subsequent e-mail, you mentioned that XXXXX also provides a XXXXX.

Ruling Requested

You are requesting that we review our ruling XXXXX as to the tax status of the Product.

Ruling Given

Based on the facts set out above, we rule that the supply of XXXXX sold in packages of XXXXX grams is taxable at 7% (15% where applicable) pursuant to section 165 of the Act.

This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Goods and Services Tax Rulings. We are bound by this ruling provided that none of the above issues is currently under audit, objection, or appeal, that no future changes to the Act, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.

Explanation

Section 1 of Part III of Schedule VI to the Act zero-rates supplies of food or beverages for human consumption ("basic groceries") and sweetening agents, seasonings and other ingredients mixed with or used in the preparation of such food or beverages, unless one of the exceptions set out in paragraphs 1(a) through 1(r) applies.

Subparagraph 1(n)(iii) of Part III of Schedule VI to the Act excludes from zero-rating the supply of:

beverages (other than unflavoured milk) or pudding, including flavoured gelatine, mousse, flavoured whipped dessert product or any other products similar to pudding, except when the cans, bottles or other primary containers in which the beverages or products are sold contain a quantity exceeding a single serving.

Under this provision, a single serving for puddings and similar products includes all servings weighing less than 425 grams.

You are of the view that the Tofu dessert is not similar to pudding.

According to the rules of statutory interpretation, a word must be taken in its ordinary meaning unless that word is given a specific meaning in the statute. The dictionary meaning of the word pudding is a dessert of a soft spongy, or thick creamy consistency. The manufacturer describes the Product as a custard-like tofu. The word custard is defined as a pudding-like usually sweetened mixture made of eggs and milk. While we appreciate the reasons that you have provided why you believe the Product is not similar to pudding, we are of the view that the differences you have outlined (e.g. different base ingredients and manufacturing process) are insufficient to preclude the Product from falling within paragraph 1(n) of Part III of Schedule VI to the Act. The Product is similar to pudding in that they are both desserts with a smooth or sponge-like texture that come in various flavours and can be eaten with or without fresh fruits.

If you require clarification with respect to any of the issues discussed in this letter, please call me directly at (613) 952-9585.

Yours truly,

Gabrielle Nadeau
Goods Unit
General Operations and Border Issues Division
Excise and GST/HST Rulings Directorate

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