Ike Enterprises Inc. v. The Queen (April 12, 2017 – 2017 TCC 59, Smith J.).
Précis: The taxpayer manufactured various food products. CRA took the position that three of them were subject to GST/HST and not exempt supplies: ginger, granola and “sticks” (made of wheat, rice and spelt). The Tax Court found that the ginger and granola were, on the evidence, groceries and therefore exempt supplies. The “sticks” were found to be a snack product and therefore not an exempt supply. The taxpayer was entitled to costs since it succeeded on 2 of the 3 disputed items; failing an agreement as to the amount of costs the parties were given 60 days to make submissions on costs.
Decision: On the ginger, the Court concluded as follows:
 Although there is little doubt that dried fruit, including the ginger root, can be candied and sold by a confectioner or even purchased and eaten as a snack, I am satisfied on a balance of probabilities that the crystallized ginger sold by the Appellant was neither a candy nor a confectionery for purposes of the exclusion set out in section 1(e). It was sold as a baking ingredient similar to a dried fruit. On that basis, I conclude that the Appellant’s crystallized ginger is zero‑rated for purposes of the Act.
Similarly the Court’s conclusion on granola:
 The Appellant argued that the Martin’s Marvellous product was sold by its retail customers in the cereal section of the store to be eaten as a cereal. The Appellant’s witness maintained that even if the packaging suggested it could be eaten “right out of the box”, it was not really possible to do so given the loose consistency of the product. In any event, I am of the view that most consumers would agree that many types of breakfast cereals can be snacked “right out of the box” and the suggestion on the packaging that you can do so, does not change a breakfast cereal into a snack item or convenience food.
 While both counsel provided a definition of “breakfast cereal”, I find that the common understanding of that expression is a cereal or similar product that is eaten with milk or hot water (as in porridge) but also with yogurt.
 While I agree that packaging and labelling will generally carry the day, I find that product placement within the grocery store is equally determinative. The Appellant’s evidence was that its customers sold the product in question in the cereal aisle of the grocery store and the Respondent’s witness did not dispute this.
 On the basis of the foregoing, I conclude that the Martin’s Marvellous granola products were sold primarily as breakfast cereals. They are therefore zero‑rated by virtue of section 1(h) of the Act.
The taxpayer was not however successful on the ‘sticks”:
 The Appellant argues that the sticks are a wheat‑based and cracker‑like product sold as an “organic snack”. The implication is that they are basically a bread product that is both wholesome and healthy. The significance of this description is that while section 1(m) excludes “cakes, muffins, pies, pastries (…)” from basic groceries, it then provides an exemption for “bread products”. In other words, bread products are considered basic groceries and that would likely include crackers or even bakery‑style bread sticks. The Respondent’s witness admitted that the sticks in question were made like crackers that are zero‑rated.
 The difficulty of course is that the Appellant’s sticks were not sold as crackers or “bread sticks” or even as a bread product. Moreover, although the Appellant’s witness explained that were made from “a dough mixture”, he also stated that the pieces were then fried. I think most consumers would agree that bread products including crackers are in fact oven‑baked and not fried.
 In the end, I find that nothing turns on the fact that the sticks were marketed as a healthy organic snack. On balance, I find that the sticks are a convenience food captured by the use of the words “other similar snack foods” and more specifically the use of the word “sticks” in section 1(f) of the Act.
As to costs:
 The Appellant is entitled to costs in accordance with the applicable Tariff reflecting its success on two of the three products. Alternatively, the parties may choose to apportion costs pro-rata to the volume of sales of the subject products during the reporting periods. If the parties are unable to agree, written submissions shall be submitted to the Court within 60 days from the date hereof.
All in all it was a quite successful day for the taxpayer.