In Brief
Craft Interiors, an interior decoration company, claimed deductions under Rule 6(4)(m)(i) of the Karnataka Sales Tax Rules for timber and other goods purchased and used in works contracts. The tax authority denied the deduction because the goods were transformed during use (e.g., logs cut and shaped into furniture components). The Supreme Court upheld the validity of the Rule, holding that Section 5B (charging provision) and Rule 6(4)(m)(i) (deduction provision) operate in different spheres. The Rule correctly requires goods to be used in the same form to qualify for deduction, implementing the principle that sales tax applies only once if goods retain their identity, but applies again if they are transformed into different commercial commodities. The appeal was dismissed.
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