Exemption classification for spent grain: prima facie fit with cattle feed entry shifts burden to Revenue to prove taxability.

Spent grain generated in beer manufacture was treated as exempt from tax under the Kerala Value Added Tax Act, 2003 because it was shown on the record to be brewery residue sold and used as cattle feed, bringing it within the exempting entry for cattle feed and supplements. The Revenue failed to prove that the commodity was specifically covered by Schedule III or otherwise fell within the charging provisions. Once the assessee established a prima facie fit with the exemption entry, the burden shifted to the Revenue to show exclusion or taxability, and the impugned orders were unsustainable for lack of such finding.

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Issues: Whether spent grain generated in the manufacture of beer is exempt from tax under the First Schedule to the Kerala Value Added Tax Act, 2003, or whether it is taxable under the charging provisions of the Act.

Analysis: The relevant exempting entry covered aquatics feed, poultry feed, cattle feed and their supplements, while excluding goods specifically mentioned in Schedule III. The material on record showed that spent grain was a brewery residue sold and used as cattle feed, and the Revenue did not establish that it was specifically covered by any exclusion or by any taxable entry. Once the assessee showed a plausible and prima facie classification under the exempting entry, the burden shifted to the Revenue to prove that the commodity fell within the tax net. The impugned orders failed to record any finding that spent grain was an item specifically mentioned in Schedule III or otherwise liable to tax under the Act.

Conclusion: Spent grain was held to be exempt from tax and not liable under section 6(1)(a) or section 6(1)(c) of the Kerala Value Added Tax Act, 2003.

Ratio Decidendi: Where an assessee establishes a prima facie fit with an exempting entry, the Revenue must prove that the commodity is excluded from that entry or otherwise taxable under the Act.

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