In Brief
Craft Interiors, an interior decoration company, purchased goods (timber, plywood, glass sheets) from registered dealers and incorporated them into works contracts. It claimed deductions under Rule 6(4)(m)(i) of the Karnataka Sales Tax Rules, which permits deductions for goods used "in the same form" they were purchased. The tax authority denied the deduction, arguing the goods were transformed (e.g., timber was cut and modified). The Supreme Court held that Section 5B (charging provision) and Rule 6(4)(m)(i) (deduction provision) operate in different spheres and are consistent. Rule 6(4)(m)(i) applies only when goods retain their original identity; goods transformed into different commodities are separately taxable and not entitled to deduction. The appeal was dismissed, allowing the assessment to proceed.
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