Simplot Australia Pty Limited v Commissioner of Taxation

Federal Court of Australia|2023-09-22|Before: Hespe J

The application be dismissed.
Unless either party applies within seven (7) days for a different order as to costs, the applicant pay the respondent's costs to be taxed if not agreed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background 1 The central issue in this proceeding is whether certain frozen food products supplied and imported by the applicant in the tax period from 1 July 2021 to 31 July 2021 are GST-free. A supply of "food" is GST-free pursuant to s 38-2 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (GST Act). An importation is a non-taxable importation if it would have been a supply that was GST-free: s 13-10(b). A supply is not GST-free if it is a supply of food of a kind specified in the third column of the table in clause 1 of Schedule 1 of the GST Act: s 38-3(c) of the GST Act. The issue is whether the frozen food products are foods of a kind specified in item 4 of that table under the category "Prepared food", being "*food marketed as a prepared meal, but not including soup". 2 The frozen food products in issue are: (a) Birds Eye SteamFresh Fried Rice Style with vegetables and omelette (SteamFresh Fried Rice); (b) Birds Eye SteamFresh Grains Plus Pearl Couscous with Chick Peas (SteamFresh Couscous); (c) Birds Eye SteamFresh Penne Pasta with Mediterranean vegetables in a Napoli sauce (SteamFresh Pasta); (d) Birds Eye SteamFresh Grains Plus quinoa with brown rice (SteamFresh Quinoa); (e) Birds Eye VeggieRice Risotto Taste Creations Cauli Rice, Mixed Mushroom and Pea (VeggieRice Risotto); and (f) Birds Eye VeggieRice Fried Rice Style Taste Creations Cauli Rice, Pea and Corn (VeggieRice Fried Rice); (together, the Products). 3 The SteamFresh Quinoa and SteamFresh Pasta products have been discontinued. The other products continue to be sold.

Relevant Provisions 4 Division 38 of the GST Act sets out supplies that are GST-free. Subdivision 38-A deals with food. It relevantly provides: 38-2 Food A supply of *food is GST-free. 38-3 Food that is not GST-free (1) A supply is not GST-free under section 38-2 if it is a supply of: (a) *food for consumption on the *premises from which it is supplied; or (b) hot food for consumption away from those premises; or (c) food of a kind specified in the third column of the table in clause 1 of Schedule 1, or food that is a combination of one or more foods at least one of which is food of such a kind; or (d) a *beverage (or an ingredient for a beverage), other than a beverage (or ingredient) of a kind specified in the third column of the table in clause 1 of Schedule 2; or (e) food of a kind specified in regulations made for the purposes of this subsection. (2) However, this section does not apply to a supply of *food of a kind specified in regulations made for the purposes of this subsection. (3) The items in the table in clause 1 of Schedule 1 or 2 are to be interpreted subject to the other clauses of Schedule 1 or 2, as the case requires. 5 Food is defined in s 38-4. There is no dispute that the frozen food products in issue are food. 6 Clause 1 of Schedule 1 is entitled "Food that is not GST-free" and relevantly provides: *Food specified in the third column of the table is not GST-free. Food that is not GST-free Item Category Food 1 Prepared food quiches 2 sandwiches (using any type of bread or roll) 3 pizzas, pizza subs, pizza pockets and similar *food 4 *food marketed as a prepared meal, but not including soup 5 platters etc. of cheese, cold cuts, fruit or vegetables and other arrangements of *food 6 hamburgers, chicken burgers and similar *food 7 hot dogs

7 Other categories of items in the table include: (a) Confectionary. (b) Savoury snacks. (c) Bakery products. (d) Ice-cream food. (e) Biscuit goods. 8 Clauses 2 and 3 of Schedule 1 provide: 2 Prepared food, bakery products and biscuit goods For the purpose of determining whether particular *food is covered by any of the items in the table relating to the category of prepared food, bakery products or biscuit goods, it does not matter whether it is supplied hot or cold, or requires cooking, heating, thawing or chilling prior to consumption. 3 Prepared meals Item 4 in the table only applies to *food that requires refrigeration or freezing for its storage. 9 It was not disputed that each of the Products requires freezing for its storage.

Legislative History 10 Subdivision 38-A was introduced with the enactment of the GST Act as a result of amendments made to the A New Tax System (Goods and Services Tax) Bill 1998 by the Senate. Those amendments included making food for human consumption GST-free subject to exceptions. 11 According to the Further Supplementary Explanatory Memorandum accompanying that Bill, the amendments would "ensure that basic food for human consumption is GST-free" (para [1.3]). Food that falls into any of the following categories is not GST-free (para [1.16]): • restaurant, take-away and prepared food; • bakery products; • confectionery; • savoury snacks; • ice-cream food; • biscuit goods; or • taxable beverages. 12 The types of food covered by the exclusion referred to in the Explanatory Memorandum as "restaurant, take-away and prepared food" was said in that memorandum to be (at para [1.19]): • all food and drink supplied for consumption on the premises where it is supplied (eg. restaurant, eat-in facilities at a take-away establishment); • all hot food and drink supplied for consumption away from premises; and • food that is included in the category of prepared food listed in new Schedule 1A. This includes some types of food that would be sold by take-away outlets (eg. sandwiches) as well as food that is essentially the same as that sold by take-away outlets (eg. frozen pizzas). It also includes frozen meals which are sold in a form that just requires heating for consumption (eg. a TV dinner or a low fat dietary meal). 13 The category of "prepared food" was further described in the Explanatory Memorandum in the following terms: [1.31] The category of prepared food as listed in new Schedule 1A is intended to cover a range of food products that directly compete against take-aways and restaurants. These products will always be taxable. It does not matter whether they: • are sold hot, cold or frozen; or • require any cooking, heating, thawing or chilling before consumption. [Clause 2 of Schedule 1A] [1.32] Prepared food specifically includes quiches, sandwiches, pizzas, hamburgers and hotdogs. Hamburgers are complete burgers including the bun. Hamburger patties sold separately will be GST-free (eg. packets of frozen hamburger patties sold at supermarkets). [1.33] New item 4 of new Schedule 1A includes in the category of prepared food, food marketed as a prepared meal but not including soup. This item will cover things such as: • prepared meals, such as curry and rice dishes, mornays and similar dishes sold cold by a takeaway or supermarket that only need reheating to be ready for consumption; • fresh or frozen prepared lasagne; • sushi; • cooked pasta dishes sold complete with sauce; • frozen TV dinners; and • fresh or frozen complete meals (eg. single serves of a roast dinner including vegetables and low fat dietary meals). [1.34] Examples of food that are not considered to be a prepared meal and will be GST-free include: • frozen vegetables; • uncooked pasta products; • fish fingers; and • baby food, baked beans, spaghetti and Irish stews that do not require refrigeration or freezing. [1.35] Item 4 of new Schedule 1A only applies to foods that require refrigeration or freezing for its storage. This test relates to the food in its unopened state. Therefore, even though a tin of baked beans would require refrigeration after it has been opened it would not be taxed as a prepared meal because in its unopened state it does not require refrigeration. [1.36] New item 5 of new Schedule 1A refers to platters or arrangements of food. Therefore, fruit and cheese and cheese and cabanossi platters will be subject to GST [new clause 3 of Schedule 1A]. [1.37] A product that is not a prepared meal, or otherwise listed in new Schedule 1A will be GST-free.

FACts AND evIDence 14 The applicant relied upon the following affidavits: (a) Affidavit of Ms Kate Livingstone, Marketing Manager - Shelf & Frozen Vegetables of the applicant dated 8 June 2022. Ms Livingstone has been employed by the applicant as the Marketing Manager - Shelf & Frozen Vegetables since May 2021. She was responsible for the development and execution of the marketing strategy and plan for the goods categorised by the applicant as Shelf and Frozen Vegetables. The Products fell within the category of goods for which Ms Livingstone had marketing responsibilities from May 2021. Ms Livingstone gave evidence of the development of the Products and their marketing. (b) Affidavit of Ms Kate Anthony, Brand Manager - Frozen Vegetables of the applicant. Ms Anthony has held the role of Brand Manager - Frozen Vegetables since 2014. Ms Anthony has been involved in the marketing of each of the Products, to varying degrees. Amongst Ms Anthony's responsibilities was assisting in the development and implementation of the communication plan in relation to the products within her portfolio, including the development of customer marketing initiatives. 15 Both Ms Livingstone and Ms Anthony were cross-examined. 16 The Commissioner of Taxation sought to rely upon an expert report of Mr Field. Mr Field had extensive experience in product development, particularly in relation to food. He had been an executive at Coles including heading a team of executive chefs and was head of Coles private label and worked on the development of some of the first chilled private label ready meals. He had worked closely with marketing teams in relation to customer communications for products in respect of which he was involved in their development.

Findings 17 The following findings are based on the evidence of Ms Livingstone and Ms Anthony. 18 Each of the Products were categorised by the applicant as Shelf and Frozen Vegetables. The applicant's other categories of goods include: • sauces and snacks; • seafood - shelf and frozen; • potato. 19 The process of product development begins with an Idea Generation Brief which sets out the idea for a new product. 20 If an idea from a Brief progresses, the next stage involves the preparation of an Integrated Product Definition Template (IPD). This document sets out further detail of the purpose of the product by identifying: (a) the unmet or unsatisfied consumer need sought to be addressed; (b) the consumer to whom the product is aimed; (c) the reason why such a consumer would purchase the product; (d) how the product is expected to be perceived and priced; (e) goals retailers would have for the product; (f) how and when the product would be used; and (g) a summary of the concept of the product. 21 The final stage of the product development before a product is approved by the applicant to proceed to market involves the preparation of a Finalised Project Proposal. By this stage, sensory research (such as taste tests) may have occurred. 22 The marketing strategy for Birds Eye products is informed by the Birds Eye Brand Guidelines. The guidelines categorised the Birds Eye products into three segments - "Everyone's Favourite", "Better Living" and "The Best Experience". 23 All of the Products, aside from the SteamFresh Couscous and SteamFresh Quinoa products, were considered to be extensions of existing product lines and did not have significant marketing resources devoted to them. 24 Ms Livingstone's affidavit annexed depictions of the packaging of each of the Products. The Court was not provided with physical samples of the Products other than the SteamFresh Fried Rice product. 25 As part of its interactions with retailers, the applicant prepares a presentation document in the form of a customer communication. 26 The applicant's website displayed the SteamFresh products (which for present purposes included the SteamFresh Couscous, SteamFresh Quinoa, SteamFresh Pasta and SteamFresh Fried Rice) as part of the SteamFresh product range as follows:

SteamFresh Couscous and SteamFresh Quinoa 27 The SteamFresh Couscous and SteamFresh Quinoa products developed out of a Brief entitled "Upsides" dated 12 November 2012. This Brief referred to the introduction of a new range of products involving a mix of vegetables and grains. At the time, there had been media coverage of foods that were referred to as "superfoods". 28 The SteamFresh Couscous and SteamFresh Quinoa products developed from an IPD dated 16 July 2014. The purpose of the proposed products was to tap into then-current health trends for products with ingredients (such as "Quinoa, Cous Cous, Wild rice, Barley and Chick Peas") that were considered to have health benefits but with which consumers had less familiarity with cooking at home. The IPD records that it was envisaged that the products would be perceived as: a nutritious, quick, flavoursome and great quality product ready in minutes for the perfect side of plate or small meal option 29 The Finalised Proposal for the SteamFresh Couscous and SteamFresh Quinoa products was dated 31 October 2014. The proposal described the range of products to proceed as containing "select vegetables that are high in nutritional value, mixed together with ancient grains and subtle flavours for a complete side of plate solution". Beneficial attributes of the products were described as: The simplicity and ease of cooking in a steam pouch helps drive appeal of the concept, together with the nutritious benefits and uniqueness of the product. Consumers can enjoy a different Veg occasion with no fuss, The launch will tap into the growing trend of consumers utilising the shelf microwave rice as a quick side of plate or small meal. Unlike the shelf stable variants, the Birds Eye SteamFresh Plus mixes contain a variety of ingredients, chunky vegetables and a subtle seasoning. Birds Eye SteamFresh Plus grain and vegetable mixes are a nutritious, quick, flavoursome and great quality product that is ready in minutes for the perfect side of plate or small meal option: Microwave ready in two and a half minutes, Brings new grains and ingredients to the Frozen Vegetables category with the inclusion of Quinoa, Cous Cous, Wild Rice and Chick Peas. Gives consumers the ability to enjoy the taste and health benefits of ingredients that they are less familiar with cooking at home for themselves, Combines vegetable and grain mixes to deliver a 'superfood' benefit to consumers, Unique health offering tapping in to current trends, [M]ore aspirational and premium 30 The envisaged use of the Couscous and Quinoa SteamFresh products was described as: Tasty and convenient side of plate option, Perfectly portioned in 200g pouches for smaller households that are only cooking for 1-2 people, Offers a new veg occasion that makes eating vegetables more appealing for lunch or dinner. 31 The ingredients disclosed on the packaging for SteamFresh Couscous were cooked pearl couscous (contains wheat) (27%), cooked couscous (contains wheat) (27%), peas (11%), red and yellow capsicum (9%), cooked chickpeas (8%), carrot (6%), spinach (5%), red onion (4%), spices (contains paprika, chilli, celery, cinnamon, mustard, garlic), sunflower oil, parsley, salt. 32 The ingredients disclosed on the packaging for SteamFresh Quinoa were cooked brown rice (20%), cooked orzo pasta (water, durum wheat semolina) (17%), cherry tomatoes (15%), cooked quinoa (15%), peas (9%), red capsicum (8%), onion (7%), cooked wild rice (6%), sunflower oil, garlic, salt, oregano. 33 The Couscous and Quinoa SteamFresh products were sold in packages containing 2 x 200g packets. The packaging for the SteamFresh Couscous product was changed on around 26 July 2021. Prior to that time, the product packaging was depicted as follows: 34 The packaging after that date was depicted as follows: 35 The back of the packaging included a note for instructions on how to heat both packets at once. 36 The packaging for the SteamFresh Quinoa product was depicted as follows: 37 The back of the packaging included a note for instructions on how to heat both packets at once. 38 A customer communication dated 13 November 2014 prepared by the applicant for Coles included a page showing the SteamFresh superfood products (couscous and two quinoa products). The product proposition was described as "Premium Steam mixes that combine unique vegetables with ancient grains and subtle flavours". The product rationale included: Complete side of plate solution - simply serve with a protein or add to a salad. 39 A trade communique for new products including the couscous and quinoa products was a page for inclusion in a trade catalogue entitled "Introducing Birds Eye SteamFresh Mealtime inspiration to drive the Frozen Vegetable category" with a by-line "Adding more vegetables to your diet just got easier!". The New Birds Eye SteamFresh Plus Mixes (which included the SteamFresh Couscous and Quinoa products) were described as: Delicious grain and vegetable mixes with subtle flavour seasonings Brings unique grains and ingredients to the category Enjoy for lunch or dinner Ready in 2.5 mins 40 A communique for the couscous product published by the applicant was entitled "The Magic's in the Bag". It consisted of a photo of a plate of the product served with pieces of lamb with a dressing with a recipe for "Pearl Couscous with Spiced Lamb Backstrap and Pomegranate Dressing". The fourth step of a five-step process was "Meanwhile, cook frozen Birds Eye Pearl Couscous with Chick Peas following packet directions." 41 A Coles catalogue for its customers had the couscous product on a page entitled "Delicious Steam Dinners" on the same page with lemon and parsley frozen fish fillets, frozen mashed potato, the frozen pasta product and a "Lean Cuisine" Indian butter chicken with rice. The central photo was of a plate containing the fish fillet on a bed of the couscous product.

SteamFresh Pasta 42 The SteamFresh Pasta product developed out of a Brief entitled "Steam Noodles" dated 22 March 2017. 43 The SteamFresh Pasta product developed from an IPD approved in around September 2017. The expected use of the product was identified as a "[t]asty and convenient side of plate option". The product concept was summarised as: Birds Eye SteamFresh pasta and vegetable mixes are a nutritious, quick, flavoursome and great quality product that is ready in minutes for the perfect side of plate or small meal option 44 The Finalised Proposal for the SteamFresh Pasta product was dated 1 November 2017. The proposed product was described as "unique". The envisaged use of the product was described as: Tasty and convenient side of plate option, Perfectly portioned in 200g pouches for smaller households that are only cooking for 1-2 people, Offers a new veg occasion that makes eating vegetables more appealing for lunch or dinner. 45 In the Finalised Proposal the positioning of the product was described in the same terms as in the product concept summary in the IPD. 46 The product was sold in packages containing 2 x 200g packets. The packaging for the SteamFresh Pasta product was depicted as follows: 47 The ingredients disclosed on the packaging for SteamFresh Pasta were cooked penne pasta (contains wheat) (33%), tomatoes (tomato pulp, cherry tomatoes, reconstituted tomato puree) (32%), cooked vegetables (zucchini, red capsicum, onion, sunflower oil) (22%), shallots (3%), vegetables (3%) (carrots, celery), extra virgin olive oil, basil, seasoning (contains capsicum, onion, garlic), tapioca starch. 48 The Court was provided with copies of two marketing communications for the pasta product published by the applicant: (1) One entitled "tasty vegetable sides ready in minutes" with a picture of the package of the product. At the bottom of the page were depicted two animated peas with the caption "Serve with chicken…and beans" in blue font a shade darker than the background blue of the communique. (1) The other entitled "tasty vegetable sides made easy" with a row of four products - the first was a picture of the pasta product, the second a picture of the applicant's frozen mashed potato, the third a picture of the applicant's broccoli, cauliflower and carrots in cheese sauce and the last a picture of the applicant's rice with Mediterranean vegetables. 49 A customer communication dated 22 November 2017 prepared by the applicant for Coles included the following comment in relation to "category opportunities" - "modernise the category through new veg varieties, flavours & meal solutions. Communicate versatility". A page in this communication was entitled "New Steam Fresh Variants" and depicted the SteamFresh Pasta products. These products were separate from "Birds Eye Meal Solutions". The consumer benefits listed for these pasta products were: Side of plate favourites without preparation & time to prepare Premium quality & taste New ingredients to the Steam segment

SteamFresh Fried Rice 50 The SteamFresh Fried Rice product developed out of a Brief entitled "Birds Eye SteamFresh Rotations" dated 16 May 2018. 51 The SteamFresh Fried Rice product developed from an IPD dated 17 September 2018. The product was intended to be directed to consumers who "[w]ant to eat more vegetables but it needs to be tasty". The product was intended to provide "[v]ariety in vegetables offers to keep mealtime interesting". The intended consumer was envisaged to be "[t]ime poor" and in need of "convenient and tasty side of plate solutions". The IPD stated under a heading "Key product performance goals customers [ie retailers]/consumers will have for the product": Ensure its clear these are SIDES for retailer reasons but mainly ATO reasons 52 The SteamFresh Fried Rice product developed following a Finalised Proposal approved sometime after 23 April 2019. According to the Finalised Proposal, the SteamFresh brand was regarded by the applicant as underpinned by four "pillars": (1) Convenience (essentially ease of cooking) (2) Health (3) Quality (4) Control (said to be "tak[ing] the thinking out of cooking") 53 The proposed product was described as "unique". It was intended to align to Asian cuisine due to changing ethnicity in Australia and the majority of existing steamed offerings being more "English" inspired. The identified key market segment was "Value-added Steam Flavoured Veg & Meal Kits". Attributes of the product were described as: Birds Eye SteamFresh Plus and Sides are a nutritious, quick, flavoursome and great quality product that is ready in minutes for the perfect side of plate or small meal option. Microwave ready in two and a half minutes, Combines vegetables, grains and flavouring in asian inspired offerings. Mixes contain flavoursome sauce/seasoning to add flavour to the vegetable/grain combinations, Tasty and convenient side of plate option, [M]akes eating vegetables more appealing for lunch or dinner. 54 The ingredients disclosed on the packaging for SteamFresh Fried Rice were vegetables (40%) (carrot, peas, onion, green beans, corn kernels, spring onions), cooked brown rice (25%), cooked white rice (23%), omelette (5%) (egg, milk, canola oil, starch, lemon juice, salt, spice), soy sauce (contains wheat), vegetable oil (rice bran, sesame), ginger, garlic, rice starch. 55 The product was sold in packages containing 2 x 200g packets. The packaging for the SteamFresh Fried Rice product as annexed to Ms Livingstone's affidavit is depicted below: 56 That packaging is different from the packaging of the sample provided to the Court which was identical to the packaging of that product as depicted in Mr Field's report: 57 On the front of the packaging as depicted in the annexure to Ms Livingstone's affidavit is a serving suggestion. It depicts the contents of a packet of the product in a bowl. The back of the packaging states "1 steam bag = 1 serves of vegetables" and depicts another serving suggestion with a by-line "Perfect served with Teriyaki chicken". The back of the packaging also has the cooking instructions set out in three steps with the following note: If cooking both bags, make sure they are not overlapping and shake bags halfway through cooking. 58 The packaging as depicted in Mr Field's report and as provided to the Court has the product branded as "flavoured sides" beneath the SteamFresh banner. On the front of the packaging the depiction of the serving suggestion for the product is of the contents of a packet with a few prawns tossed through. 59 An advertisement prepared in 2019 for two products to be distributed through Coles depicted two products under the heading "Vegetable Sides Made Easy & Delicious" - one of the two products being the SteamFresh Fried Rice product and another product produced by the applicant being Thai Inspired Vegetables with Coconut Sauce (not the subject of the present dispute). The advertisement contained a depiction of each of the packages of the products. The packages showed the content of the package plated in a bowl with nothing else.

VeggieRice Risotto and VeggieRice Fried Rice (VeggieRice Products) 60 The VeggieRice Products developed out of a Brief entitled "Veg Switches Meal Bases" dated 25 June 2020. 61 The VeggieRice Products developed from an IPD dated 25 August 2020. 62 The VeggieRice Products developed following a Finalised Proposal dated 12 April 2021. The proposal described the products as "meal bases". Attributes of the products described in the proposal included: Veg Switchers Meal Bases products Healthy Chefs are the key consumers targeted within this range. 63 The benefits to prospective consumers were described in the proposal as: Lower carb alternative to comfort meals Easy way to get increased veg intake without compromising on flavour and taste 64 The proposal stated that there were "no competitive products in Frozen Veg category to compare the meal bases products" but the products "come out favourably vs other alternative options for carb replacements and similar meal replacements eg. Frozen meals risottos." 65 The proposal envisaged consumers were to be instructed to "[p]an fry (for best results) for 6-8 min (or microwave)" and to "[a]dd chosen protein for a more complete meal or serve alone as a vegetarian alternative." 66 The VeggieRice Products were sold in 500g pillow bags with no separate pre-portioned packets inside. 67 The packaging for the VeggieRice Fried Rice product as annexed to Ms Livingstone's affidavit is depicted below: 68 The packaging for the VeggieRice Risotto product as annexed to Ms Livingstone's affidavit is depicted below: 69 The VeggieRice Risotto product package shows a serving suggestion of the package contents with added grilled chicken. The VeggieRice Fried Rice product shows a serving suggestion of the package contents with added pork. 70 The ingredients disclosed on the packaging for VeggieRice Risotto were cauliflower (40%), water, button mushroom (11%), fried onion (onion, sunflower oil) (7%), black fungus (7%), cream, peas (5%), cheese mix [emmental, maasdam, parmesan (contains milk)], white wine, canola oil, shallot, skim milk powder, corn starch, garlic, vegetable stock (contains onion), rice starch, parsley, salt, mushroom powder, sugar, white pepper. 71 The ingredients disclosed on the packaging for VeggieRice Fried Rice were cauliflower (59%), peas (6%), corn (6%), black fungus (5%), omelette (egg, water, maize starch, salt, lemon juice concentrate, pepper), red capsicum (5%), soy sauce (contains soy, wheat), spring onion, onion, vegetable oil (rice, sesame), ginger, garlic, rice starch. 72 On the applicant's website in 2022 the VeggieRice Products formed part of a range of products entitled "Carb Alternatives". The range includes three unseasoned "VeggieRice" products (broccoli and cauliflower, carrot, cauliflower and broccoli, and cauliflower), one "VeggieMash" product (pumpkin and cauliflower), two VeggieRice seasoned products (seasoned broccoli and cauliflower, garlic and parsley flavour and seasoned cauliflower, coconut flavour) and two "new" "VeggieRice Taste Creations" being VeggieRice Risotto and the VeggieRice Fried Rice. 73 An advertisement prepared by the applicant for the VeggieRice Fried Rice product stating "New at Coles" showed at the top of the advertisement a part of a plate of the product with prawns added. The advertisement stated "Make the Healthier Switch" with a by-line "Birds Eye Taste Creations makes it easy to switch to a delicious lower carb veggie side dish". 74 A promotion page from a magazine promoting the VeggieRice Fried Rice product entitled "Veggie Hit" with a by-line "Dial up the veg in your cooking with Birds Eye Veggie Rice. Enjoy it as a side, or use it to make this mouth-watering veggie fried rice" depicted the content of two packets in a bowl with tossed pork mince. On the page was a recipe for "Veggie rice with pork mince". Ms Livingstone described the applicant's overall positioning of the VeggieRice range of products, and the VeggieRice Products, to have been as a side dish or as the base for a meal. 75 An advertisement prepared by the applicant for the VeggieRice Products (being the VeggieRice Fried Rice and the VeggieRice Risotto) showed serving suggestions of the content of the packages - the VeggieRice Fried Rice was shown plated with prawns tossed through and the VeggieRice Risotto was shown plated with sliced pork tossed through. 76 A customer communication dated 17 June 2021 prepared by the applicant for Woolworths showed the VeggieRice Products under a heading "Drive new Consumption Occasions - Providing solutions for consumers to increase their vegetable intake". On a separate page the two products appeared on a page entitled "NEW Birds Eye Meal Bases" with the following identified "Consumer Benefit[s]": ✓ Easy solution to reducing carb intake and increasing vegetable intake ✓ Pre-prepared no chopping or processing and different to what is available in fresh/shelf ✓ Versatile base and cooking methods, with a long shelf life

"Expert" evidence of Mr Field 77 There were significant difficulties with the evidence of Mr Field. The difficulties arise from the form of the questions asked, the nature of his experience, the methods he adopted and the opinions he expresses. 78 The first question asked of Mr Field was to identify products which a consumer might wish to purchase as substitutes for each of the Products. As discussed further below at paragraph [105], the statutory question looks to the kinds of foods marketed as prepared meals and thereby looks at the activities of the seller. Mr Field was asked to approach the identification of a genus of products by reference to the conduct of consumers. That is not the statutory question. 79 The alternative products identified by Mr Field through the eyes of a consumer that could be purchased in substitution for the Products included air dried broccoli and "cauli rice", frozen soybeans, and a plain pre-cooked pasta product without sauce. 80 Mr Field's approach to the question asked of him was to walk around a supermarket and identify products he thought consumers would purchase as substitutes for the Products. Mr Field's professional background is in product development. It is not clear how this exercise involved any specialist knowledge of Mr Field. Even if it were possible to consider that one might have an expertise in supermarket shopping, Mr Field was not such an expert. It may be accepted that a person may have expertise in marketing. But Mr Field did not give a report on how the products he identified were marketed beyond describing their packaging. 81 The second question asked of Mr Field was taking each of the products he had identified as alternatives, to identify the extent to which each of those alternative products were similar to the Products in terms of their nature, quality and adaptation. 82 Given the difficulties with the basis on which Mr Field had identified the alternative products, the Court was not assisted by the extent to which Mr Field considered each of those alternative products were similar to the Products in terms of their nature, quality and adaptation. 83 The third question asked of Mr Field was the extent to which any of the features of the Products and of the alternative products he had identified indicate that each of the Products and the alternative products were intended to be consumed as a meal or were likely to be consumed as a meal. Mr Field was instructed that a "meal" is an ordinary English word and simply means that which is taken at or provided for one occasion of eating. 84 There are number of difficulties with this question. First, the statutory question is not concerned with the intention of consumers or the aims of the supplier of the product but with a category of food that is of a kind marketed as a prepared meal. Second, it is far from clear how an analysis of alternative products identified by Mr Field through the eyes of a consumer assists in determining whether the Products satisfy the statutory description. 85 Third, it is not clear how the application of the meaning of an ordinary English word is the proper subject of an expert report. Mr Field's evidence does not support a conclusion that the words have a specialised or trade sense nor does the statutory context. As Sundberg J said in Lansell House Pty Ltd v Federal Commissioner of Taxation [2010] FCA 329; (2010) 76 ATR 19 at [50] (Lansell (PJ)): …There is in truth no particular trade to which the goods and services legislation is directed…It is directed to all suppliers in the supply chain, and includes the manufacturer, importer, wholesaler and retailer. This underlines the high improbability of there being one settled specialised meaning of the various food types. It argues strongly in favour of the words being accorded their ordinary meaning as understood by a reasonable objective observer who has no detailed knowledge of the intricacies of the manufacture of the particular products. 86 The items in the table in Schedule 1 of the GST Act "identify household food items which the ordinary consumer, including their vendors are familiar": Lansell (PJ) at [46]. The items are to be construed based on common sense and common experience. As explained further by Sundberg J in Lansell (PJ) at [57]-[60]: [57] …As Pearce and Geddes observe, courts should be cautious of subjecting words in legislation that have an ordinary, everyday meaning to intensive analysis: D C Pearce and R S Geddes, Statutory Interpretation in Australia (2002) 4th ed, LexisNexis at 120-121. In Seay v Eastwood [1976] 1 WLR 1117 the House of Lords considered the word "bets" in the definition of bookmaker. Lord Wilberforce, with whom Lord Salmon agreed, said that in determining whether an activity was or was not a "bet," "refined analytical tools" were not appropriate. Decision-makers should use their local knowledge, experience of the world and commonsense, to give a sensible interpretation of the expression. An appellate court required to review such decisions should endorse those that have been reached and confirmed in this way: Seay (at 1121). [58] The same approach was adopted by Kitto J to the expression "mining operations" in ordinary parlance in New South Wales Associated Blue-Metal Quarries Ltd v FCT (1955) 94 CLR 509 at 514; [1955] ALR 441 at 444, where his Honour said: … the conclusion must depend on one's own understanding of the sense in which words are currently used, and, although Dr Johnson in his day defined a "quarry" as a "stone mine," it seems to me an unnatural and inapt use of language to apply the term "mining operations" to the getting of stone such as blue-metal by open excavation, and to call the land on which those activities are conducted "a mining property." [59] The approach espoused in the above cases is especially appropriate where, as here, the question for decision is the proper classification of everyday food items for the purpose of the goods and services tax. The everyday English words in item 32 must be given their ordinary and natural meaning - what is the reasonable view on the basis of all the facts known to the court as to whether or not the product is one which falls within the relevant category, which here is crackers. Thus, it seems to me, it is inappropriate for the court to apply refined analytical tools - in this case rather elusive and qualified technical distinctions - to an ordinary English word, rather than local knowledge and commonsense. As Toulson LJ said in Procter & Gamble, this is not a scientific question. [60] It is not in my view the function of an expert to give evidence about the meaning of ordinary words such as bread, biscuit and cracker. In Australian Gas Light Co v Valuer-General (1940) 40 SR (NSW) 126 at 137 Jordan CJ said: The question what is the meaning of an ordinary English word or phrase as used in the statute … is to be resolved by the relevant tribunal itself, by considering the word in its context with the assistance of dictionaries and other books, and not by expert evidence … although evidence is receivable as to meaning of technical terms … See also Pepsi Seven-Up (at FCR 296; ATR 451; ATC 4751; ALR 638). 87 The phrase "prepared meal" is an ordinary phrase of common usage intelligible by a lay person. In Uber BV v Federal Commissioner of Taxation [2017] FCA 110; (2017) 247 FCR 462, Griffiths J stated at [115] that "[i]t is well settled that expert evidence is not admissible as to the ordinary meaning of the word or phrase". 88 The Commissioner did not seek to contend that the exercise undertaken by Mr Field resulted in him identifying a specific category of foods to which the Products belonged. The Commissioner accepted that some of the foods in the category of foods identified by Mr Field would fall outside of the category of foods specified in row four of the table in Schedule 1. For example, although Mr Field has identified pasta without sauce as being of the same category of foods as pasta with sauce if the category of foods is identified based on Mr Field's perception of what consumers would regard as substitutable products, the Commissioner conceded that pasta without sauce is not food of a kind that is food marketed as a prepared meal. The Commissioner did not thus adopt the entirety of Mr Field's analysis. 89 The applicant, who neither called nor cross-examined Mr Field, relied upon the content of his report in so far as Mr Field expressed opinions concerning how the applicant's products were in fact marketed. 90 Mr Field's report does not illicit expert opinion evidence as defined in s 79 of the Evidence Act 1995 (Cth) and as explained by the High Court in Dasreef Pty Ltd v Hawchar [2011] HCA 21; (2011) 243 CLR 588 at [32]: To be admissible under s 79(1) the evidence that is tendered must satisfy two criteria. The first is that the witness who gives the evidence "has specialised knowledge based on the person's training, study or experience"; the second is that the opinion expressed in evidence by the witness "is wholly or substantially based on that knowledge". In relation to the second criteria, the High Court stated at [41]: ...The point which is now made is a point about connecting the opinion expressed by a witness with the witness's specialised knowledge based on training, study or experience. 91 Even if admissible, there is no apparent link between the opinions Mr Field expresses and his professional expertise. His evidence rises no higher than lay evidence of his observations of the packaging of a number of products. That evidence is of little, if any, assistance except to the extent of his description of the packaging of the Products. 92 The Court has relied upon the report of Mr Field solely for its description of the Products and their packaging. The Court does not accept that Mr Field identified a genus of foods to which the Products belonged in a manner that assists the resolution of the statutory question or that the genus he so identified was based on his specialised training or experience.

Observations on the statutory scheme 93 In JMB Beverages Pty Ltd v Federal Commissioner of Taxation [2009] FCA 668; (2009) 73 ATR 191, Edmonds J (at [63]-[64]) considered that the language of the GST Act, statutory context and extrinsic materials gave "every indication" of "a legislative purpose to exempt from GST, 'basic food for human consumption'" and went on to say at [65]: The notion of 'basic' food pertains to food that is fundamental to sustenance, or rudimentary, having few or no attributes, beyond the ordinary or essential elements necessary to achieve that purpose: see the definition of 'basic' in the Oxford English Dictionary: 'Providing or having few or no amenities, accessories, functions, etc, beyond the ordinary or essential; of or designating the lowest standard acceptable or available; rudimentary.' On one level, the idea of basic food inevitably devolves into a merit category (see G S Cooper GS and R J Vann, "Implementing the Goods and Services Tax" (1999) 21 Sydney Law Review 337 at 349) in that, caught up in that notion is the presumption that it is likely to encompass food which is fresh, natural or unprocessed: see the Further Supplementary Explanatory Memorandum (Senate) to the A New Tax System (Goods and Services Tax) Bill 1998 (Cth) at cl 1.2, that '… supplies of fresh fruit and vegetables by a primary producer will be GST-free.' This is evident from Sch 1 as to the 'Food that is not GST-free', and Sch 2 as to the 'Beverages that are GST-free'. For example, items such as certain prepared foods, snack foods, confectionary, ice cream and biscuits are not GST-free. As to beverages neither soft drinks, (including flavoured mineral waters) nor cordials, are GST-free. 94 An examination of the statutory context of item 4 of clause 1 of Schedule 1 does not, in my view, reveal a coherent policy that is of assistance in the present case. One might speculate that the forms of the specific carve outs from the rule that food is GST-free were the product of compromise and lobbying. In Stevens v Kabushiki Kaisha Sony Computer Entertainment [2005] HCA 58; (2005) 224 CLR 193, McHugh J stated at [126]: Much modern legislation…is the product of intensive lobbying, directly or indirectly, of Ministers and parliamentarians. In such circumstances there is a danger to attempt to construe the items by reference to some supposed legislative purpose rather than solely by reference to the text. There is, for example, no clear rationale as to why soup marketed as a prepared meal should be GST-free but other types of food not. It is not clear why food sold unrefrigerated in vacuum-sealed or canned form is not GST-free but the same sort of food (eg Irish stew) sold in frozen form is subject to GST. The issue for determination in this case is not assisted by reference to a concept of food being "sufficiently basic". Rather the words are to be construed in accordance with their ordinary meaning. 95 As Sundberg J said in Cascade Brewery v Commissioner of Taxation [2006] FCA 821; (2006) 153 FCR 11 at [40]: The reason for the qualified exemption of food from GST is well-known, and was common ground. It was the political compromise reached in order that the GST scheme might become law. The distinction drawn in Totalizator between an exemption directed at a particular person or body and one that encourages a particular activity is applicable here. It is true, as Cascade says, that Item 13 is not directed at a particular person or body. But nor is it concerned to encourage any particular activity. It is not intended to encourage the production of beverages or ingredients of any kind. It was the result of a political deal that gave partial exemption to food. In the case of the beverage component of food, the result was that the beverage or an ingredient therefore would be exempt if it was of a kind marketed principally as food for infants or invalids. In accordance with Totalizator, there is no occasion to approach the meaning of "infant" or "invalids" in any manner other than by according the words their ordinary meaning.

"Food of a Kind" 96 Section 38-3(1)(c) applies to "food of a kind" specified in the third column of the table in clause 1 of Schedule 1. Clause 1 of Schedule 1 states that "*Food specified in the third column of the table is not GST-free". The third column specifies "food". 97 The phrase "of a kind" was considered by Sundberg J in Cascade Brewery. The consideration of that phrase was in the context of the use of that phrase in an item appearing in Schedule 2 of the GST Act (which specifies beverages that are GST-free). That is, the items specified in the table were beverages "of a kind marketed principally as food for infants". It is observed that the relevant item in the present case itself does not refer to food "of a kind marketed". In the present case, the phrase "food of a kind" is to be found in s 38-3 in the main body of the GST Act. 98 As a matter of construing the language of s 38-3 (rather than the language of an item in the table in Schedule 1), effect is to be given to all the words. Section 38-3(1)(c) does not refer to "food specified" in the third column of the table but refers to "food of a kind specified". As Sundberg J in Lansell (PJ) at [19] observed: Section 38-3(1)(c) speaks of food "of a kind specified in the third column …." In my view the words "of a kind" add something to "specified." If the intention had been simply to exclude the items in the table in the schedule, parliament would have used the words "food specified in the third column." What then does "of a kind" add?... The phrase "of a kind" is to be given operative effect. The words "of a kind" are words of expansion rather than limitation: Cascade Brewery at [16] (Sundberg J). As stated by the Full Court in Lansell House Pty Ltd v Commissioner of Taxation [2011] FCAFC 6; (2011) 190 FCR 354 at [30]: …The use of the words "of a kind" in s 38-3(1)(c) of the GST Act adds further generality to the description of the items described in Schedule 1: Air International Pty Ltd v Chief Executive Officer of Customs (2002) 121 FCR 149 per Hill J. 99 It is therefore sufficient if the foods are of a kind specified in the third column. The use of the word "specified" does not limit this description of the items in Schedule 1: Lansell House Pty Ltd v Commissioner of Taxation [2011] FCAFC 6; (2011) 190 FCR 354 at [32]. Read in this way, the third column is to be taken to refer to a genus or category of food rather than an identification of a specific item of food. There is a statutory presumption that there exists a category or genus of foods that are "marketed as a prepared meal". 100 As the so-called expert report of Mr Field demonstrates, there is a real difficulty in this case in adopting a two-stage analysis of asking what is the category or genus of food to which each of the Products belongs and then separately asking whether that category satisfies or corresponds with the statutorily specified category or genus. 101 The approach of Mr Field and the analytical approach contended for by the Commissioner suffers from the precise difficulty identified in Clean Investments Pty Ltd v Commissioner of Taxation [2001] FCA 80; (2001) 105 FCR 248 at [91]-[93]: [91] I respectfully agree with Hill J in Diethelm (at 472) and, I suggest, with Burchett J in Chubb at 559, that it is preferable to pose the statutory question as a single composite question. [92] In some cases it may be misleading to address separately the question of identification of the "genus" to which the particular goods in question belong, and the question whether that genus meets the description "ordinarily used for household purposes". The problem can be indicated by the question "What kind of kind of goods is the Item speaking of?" Answering the genus question separately as a threshold one will assume, without making explicit, an answer to this question. [93] Goods and purposes can be equally correctly described in different ways, in particular, broadly or narrowly, yet the description selected may dictate the answer to the statutory question. For example, an architect's stool, an office chair and a kitchen stool or chair may be described as "stools" or "chairs" and their purpose as being "to provide seating". Yet it would be wrong to conclude that the architect's stool or the office chair is of a kind ordinarily used for household purposes for no other reason than that, like the kitchen chair, it is ordinarily used for the purpose of providing seating. 102 Food can correctly be described in different ways. Asking a question at large of what genus an item of food belongs to is not apt to cast light on the statutory question in this case. 103 The Commissioner's reliance on the nature, quality and adaptation of the Products to identify the genus or category of foods to which they belong is also problematic in the context of the present case. The concepts of nature, quality and adaptation are useful when trying to classify goods of a kind specified by reference to their use. Those concepts of nature, quality and adaptation are of less utility when trying to classify food of a kind marketed as a prepared meal. As discussed further below from paragraph [105], the category is directed not at how the Products are in fact consumed or purchased but whether they are members of a class or genus of foods that are marketed as prepared meals. The characteristic that the foods must have in common is that they are of a type marketed as a prepared meal. The question is not how the Products themselves are marketed but whether the Products are of a kind that are marketed as prepared meals. 104 Ultimately, the matter is to be determined based on common experience and common sense after close regard to the factual material before the Court: Taxation, Commissioner of (Cth) v Chubb Australia Ltd (1995) 56 FCR 557 at 575 (Tamberlin J).

"Marketed as" 105 The focus of item 4 of Schedule 1 is on how foods are marketed and not how they are consumed. "Marketed" looks at the activities of the seller. It is the activities of the seller of that kind of food and not the actual use by the consumer of the food which is the subject of examination. Marketing is not any activity performed by the seller but is the activities of the seller in communicating or conveying messages to the market for the promotion or sale of the product: Cascade Brewery at [24]-[26]. Internal activities such as product conception may be precursors to the marketing of the product but are not themselves marketing. 106 The answer to whether particular foods are of a kind marketed in a particular way may be assisted by looking at how the particular foods have in fact been marketed (Cascade Brewery at [11]): The words 'marketed principally as food for infants' in Item 13 require an examination of the content of the advertising and other marketing in fact carried out either by the taxpayer or by competitors in the market… 107 The applicant submitted that the marketing of the Products required an examination of the advertising and other marketing activities of the applicant. However the marketing practices of the taxpayer itself will not be determinative (Cascade Brewery at [22]): …Cascade's contention may have better reflected the case law had it been that in determining whether goods are of a kind marketed principally as food for infants, it is permissible to look at whether they have been or are in fact marketed principally in that way, rather than determining that issue in its own right as an answer to the statutory question. The Commissioner's contention may have better reflected the case law had it accepted that the actual marketing of the goods is relevant to whether they are of a kind marketed principally as food for infants. 108 It is not simply the taxpayer's activities as a seller that are relevant. As observed by Sundberg J in Lansell (PJ) at [109]. …A supplier cannot by a label govern the classification of a product for the purposes of the GST Act. A food does not cease to be of a kind marketed as a prepared meal merely because the seller of the particular item of food does not engage in any marketing at all. A lasagne does not cease to be a food of a kind that is marketed as a prepared meal simply because it is sold in plain packaging with no accompanying advertisement. That is because other sellers of lasagne market lasagne as a prepared meal. The content of the marketing is to be distinguished from the seller's aims and hopes in respect of the marketing. The content of the marketing is determined having regard to what a reader of the labels and printed advertising materials or viewers of television or web advertisements would derive from them: Cascade Brewery at [11]. Relevant matters in evaluating how a food is marketed includes labelling, packaging, display, promotion and advertising: see for example Cascade Brewery at [23]-[26]. 109 The Products here are sold at two levels - to end consumers by retailers and by the producer/manufacturers/importers to the retailer/distributor. In the present case, where the primary form of advertising is the packaging of the product, information on the packaging can be important. The other forms of marketing included trade communiques provided by the applicant to retailers and catalogue advertising by retail supermarkets. The Products were also displayed on the applicant's website. 110 The phrase "marketed as a prepared meal" directs attention to the marketing of the product to the end consumer of the product. I have therefore regarded how the foods are marketed by the applicant and by the sellers of the Products to consumers (ie, retail food vendors such as supermarkets) as important.

"Prepared Meal" 111 The phrase "prepared meal" is to be accorded its ordinary meaning determined in its context. As explained above, the context is a schedule of exceptions that are not entirely coherent. 112 There was no dispute between the parties that the Products constituted food and were "prepared" foods in the sense that nothing further needed to be done to the contents of the packages other than heating and serving the Products. The real question is whether the Products were foods of a kind characterised as foods marketed as a prepared meal. In considering the kinds of foods marketed as "prepared meals" it is necessary to consider what constitutes a prepared meal. 113 The applicant sought to characterise a prepared meal by reference to things that were not meals. It was seeking to ascribe a meaning to "prepared meal" by exclusion. It contended that a meal is to be distinguished from foods which are not a meal but are a meal component. The applicant sought to support the distinction by reference to the Commissioner's public ruling entitled "Detailed Food List - Details of the GST status of major food and beverage product lines" published by the Commissioner. 114 The submission assumes there are two categories of foods that are mutually exclusive. The distinction is not made in the GST Act. The fact that the Commissioner may have expressed the distinction as being of utility in a public ruling does not assist. My task is not to reach a decision that harmonises the rulings on various products: Lansell (PJ) at [107]. 115 The dictionary definition of "meal" is of limited assistance. The Oxford English Dictionary defines a meal as: 2a. Any of the occasions of taking food which occur by custom or habit at more or less fixed times of the day, as a breakfast, dinner, supper etc. 2b. Without reference to time: An occasion of taking food, a repast. Also, the material of a repast; the food eaten at or provided for a repast. It defines "repast" as: 1. A quantity of food and drink forming, or intended for, a meal or feast; a meal or feast in its material aspect, freq. with reference to the quantity or quality of the food. 116 The Macquarie Dictionary defines a "meal" as: noun 1. one of the regular repasts of the day, as breakfast, lunch, or dinner. 2. the food eaten or served for a repast. It defines "repast" as: noun 1. a quantity of food taken at or provided for one occasion of eating: to eat a light repast. 117 The definitions are dependent on a concept of an occasion of eating. According to the definitions, a meal is an occasion of eating or the food consumed at an occasion of eating. What constitutes an occasion of eating for this purpose is not informed by the dictionary definition. Furthermore, there may be cultural influences on what constitutes an occasion of eating. As the applicant's product development history demonstrates, there have been demographic changes in the population of Australia over time, including in terms of ethnicity. What may have been the ordinary understanding of a meal occasion in Australia in the 1940s will not necessarily mirror the ordinary understanding of a meal occasion in Australia in the 2020s. 118 In times past, the occasion of eating may have traditionally referred to breakfast, lunch or dinner. But just as taste in foods change with the passage of time so too do dietary habits. Meals today are consumed at different hours and smaller meals at times outside of the traditional meal times of breakfast, lunch and dinner are matters of common experience. As early as 1945 it has been judicially recognised that a person "may want a meal at an irregular hour" and a meal did not necessarily mean a breakfast, lunch, dinner or tea: Miller v MacKnight [1945] J.C. 107 at 111. 119 The statutory context here is the identification of a class or category of food, not of an occasion. For food to be of a kind marketed as a prepared meal it is not necessary it be marketed for consumption as a breakfast, lunch or dinner. The category looks to the content of the food rather than the time at which it is taken. 120 Based on the Macquarie Dictionary definition of a meal, the Commissioner contended that the word meal means a quantity of food that is taken on one occasion of eating. On his submission, it is a non-negligible quantity of food sufficient to constitute a more than "incidental activity". 121 That description is not accepted. A prepared meal connotes something beyond a non-negligible quantity of food. A prepared meal looks at attributes beyond quantity. Size and content are attributes of a prepared meal. 122 The term "meal" has been judicially considered in the context of liquor offences in which liability turned on whether liquor had been supplied with a "meal" or a part thereof or in the related context of legislation prohibiting the sale of certain items on Sundays unless those items were a "meal or refreshment", or the items were "included" in the sale of a meal or refreshment. In Mills v O'Donoghue (1908) 10 WAR 81 at 83, Burnside J observed that the term "meal" did not appear to be "one to which any precise or definite meaning can be attributed" and that "[i]t may be extended to include what might be described as the repast of an alderman, or it may be limited to the fare of a beggar". 123 The context of liquor licensing offences resulted in a focus on the substance of the food served. Thus in MacKiewicz v KAL Holdings Pty Ltd [1999] WASCA 84 at [18]-[19], in the statutory context of a meal being defined as "a genuine meal, not supplied in sandwich form, eaten or to be eaten by a person while seated at a dining table or counter", Miller J held that a substantial serving of wedges comprising four or five potatoes served with sour cream at around 2.00 am was a "meal" being "sufficiently filling for two people to eat" and observed that "traditional 'middle-class meals' of 'meat and three vegetables' are no longer necessarily the norm". That position may be contrasted with the position adopted over half a century earlier by Martin J in Olive v Carroll [1941] VLR 37 at 38-40, who considered that portions of savouries, bread and cheese, sandwiches, pigs' trotters and lettuce were "generally used to titillate the appetite" and could not be described as a "bonâ fide meal". 124 Although the statutory context here is far from the liquor licensing context considered in the authorities, the attributes of a "prepared meal" are to be discerned from common experience. Those attributes include: (a) quantity - a meal connotes a quantity of substance, even if it may be termed a small meal; (b) composition - a prepared meal connotes food consisting of more than one ingredient or element. Whether a combination of foods constitutes a meal is a question of fact and degree. A dish comprised solely of vegetables can be a meal. However a serving of a mix of vegetables (eg, peas and corn) may not be a meal; (c) presentation - a prepared meal connotes a combination of foods that is complete. Matters such as seasoning, sauces and flavourings may all be relevant in determining whether foods are of a kind marketed as a prepared meal. 125 Foods of a kind marketed as a prepared meal therefore refers to foods of a sufficient quantity, mix and seasonings as to be regarded by the ordinary person as being of a kind that are marketed as a prepared meal. 126 The applicant submitted that the form of packaging was of importance and that foods that are not packaged in containers from which they could be consumed were not "prepared meals". That contention is not accepted. The form of packaging is not determinative of the issue of whether a food is of a kind marketed as a prepared meal. Foods packaged in a form to serve more than one individual do not cease to be foods of a kind marketed as a prepared meal merely because the foods are intended to be divided into the consumer's desired serving portion.

Characterising the PRODUCTs 127 The difficulty in this case arises from the novel or unique nature of the Products. Many of the Products did not have direct competitors at the time of their launch. 128 Each of the SteamFresh products (as opposed to the VeggieRice Products) are packaged in a 400g bag that contains two microwaveable bags of 200g each. The witnesses deposed that the applicant considered (and described on its packaging) those bags as containing two servings of vegetables (approximately 75g) together with the added flavouring (grains, sauces, spices, dressings or other) and each bag was expected to serve two persons. The resulting serving size (100g per person) was said by the witnesses to be small and was intended to serve as a side to a meal. For the reasons given by Sundberg J in Cascade Brewery I attach little weight to that evidence which is more in the nature of evidence of the applicant's aims and expectations. It was also given in a context where the applicant was aware of the GST consequences (as demonstrated by the product history). 129 Similarly, whilst the applicant sought to characterise at least some of the Products as "side dishes" by their labelling, packaging and serving suggestions or recipes, that form of marketing was undertaken with a keen awareness of the GST treatment of prepared meals. A serving suggestion is just that - a suggestion and not a requirement. A taxpayer by their own marketing behaviours cannot dictate the characterisation of their product when the statutory question directs attention not to the specific product but to products "of a kind". A more objective approach is required. 130 Furthermore there is no necessary dichotomy between a meal component or side dish and a meal. There is no reason why a food may not be of a kind that is marketed as a meal component as well as being food of a kind that is marketed as a meal. 131 The Products here were sold to consumers by supermarkets. The packages were displayed in freezers. In its presentations to retailers, the applicant suggested the products be displayed alongside other Birds Eye branded plastic-packaged (as opposed to boxed) frozen vegetable products. Some of the products consist of unseasoned vegetables, some consist of vegetables with sauce. Based on the evidence, the Birds Eye branded categories of frozen products were essentially frozen vegetables, frozen fish, and potato products. The suggested grouping of the Products with frozen vegetables is unsurprising. The manner in which the applicant suggested to retailers for the display of its products does not provide a criterion by which it can be determined whether any of the Products are of a kind of food marketed as a prepared meal. 132 The supermarket catalogues provide no clear basis for determining whether the Products were of a kind marketed as a prepared meal. The catalogues issued by the supermarkets before the Court had some of the Products displayed on a page that included products that would ordinarily be regarded as meals (eg Lean Cuisine Butter Chicken) as well as products that were not (eg frozen mashed potato). 133 On its assessment based on common experience the Court has reached the following conclusions. 134 The SteamFresh Fried Rice product is a combination of foods in the form of vegetables, rice and egg. It is flavoured and seasoned. Although pre-packaged in packets that are suggested to serve two people, there is nothing inherent in each of the packets that does not make it suitable for consumption by an individual. Indeed the packaging recognises that there may be a desire to heat both packets at once. Although labelling and packaging has changed over time, the historical packaging represented the product in a bowl on its own. 135 A bowl of fried rice with vegetables, scrambled egg and flavouring, with or without added meat or seafood, is food of a kind marketed as a prepared meal. The size of the individual packets (including the fact that both packets can readily be heated together to increase portion size if so desired) is sufficiently substantial as to be regarded as food of a kind marketed as a prepared meal. As a matter of common experience in modern Australia, this product is food of a kind that is marketed as a prepared meal. 136 It is appropriate to consider the SteamFresh Couscous and SteamFresh Quinoa together. Each was part of a range of frozen food products that combined grains and vegetables. Both products were seasoned and flavoured. The packaging included instructions for heating both 200g packets at once and as a practical matter both packets can be readily heated together. 137 A bowl or plate of mixed grains, vegetables and seasonings sold in packages that contain 400g of the product in two separate 200g packets is a combination of foods in sufficiently substantial quantity as to constitute food of a kind that is marketed in modern Australia as a prepared meal. Although the applicant took care not to market its own products as directed to those who refrain from eating meat or seafood, the products have the characteristics of being complete without necessarily adding meat or seafood. These products are of a kind marketed as a prepared meal. 138 The SteamFresh Pasta product is a combination of pasta, vegetables and sauce. It is prepared by heating. Pasta packaged together with sauce is, as a matter of common experience, generally food of a kind marketed as a prepared meal. Although pre-packaged in packets that are suggested to serve two people, there is nothing inherent in each of the packets that does not make it suitable for consumption by an individual. Each packet may be heated to serve a single individual or indeed two packets may be heated at once. The Product is sold in a quantity that is sufficiently substantial to be regarded as a kind of food marketed as a prepared meal. 139 It is appropriate to consider the VeggieRice Risotto and VeggieRice Fried Rice together. Both these products were sold in pillow packages and were not pre-portioned. It was entirely up to the consumer to determine how much or how little of the package was to be consumed on any one occasion. 140 The VeggieRice Products used cauliflower as a low carbohydrate substitute for rice. That attribute aside, both products were in fact marketed as "meal bases". Each product was a combination of ingredients and was flavoured. Whilst it was possible for consumers to choose to add protein in the form of meat or seafood to the products, such an addition was not necessary to produce a prepared meal. As a matter of common experience, both risotto and fried rice are foods of a kind that are marketed as prepared meals. The fact that these particular products used a substitute for rice does not alter their character. Both these products are a kind of food marketed as a prepared meal. 141 The legislative scheme with its arbitrary exemptions is not productive of cohesive outcomes. It has left the Court in the unsatisfactory position of having to determine whether to assign novel food products to a category drafted on the premise of unarticulated preconceptions and notions of a "prepared meal". It may be doubted whether this is a satisfactory basis on which taxation liabilities ought to be determined. 142 The application is dismissed with costs. I certify that the preceding one hundred and forty-two (142) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Hespe.

A New Tax System (Goods and Services Tax) Act 1999(Cth)ss 13-10, 38-2, 38-3, 38-4, Schedule

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