In Brief
The State of Karnataka challenged High Court rulings on the rate of VAT applicable to goods used in civil works contracts prior to 1 April 2006. The central issue was whether a uniform rate of 12.5% applied to all goods in works contracts or whether individual goods were taxed at their respective rates. The Supreme Court upheld the High Court's decision, holding that prior to 1 April 2006, goods in works contracts were taxed at their individual applicable rates, not uniformly. A uniform rate for works contracts was introduced only from 1 April 2006 through an amendment. The judgment clarifies that goods specified in schedules (like iron and steel at 4%) retained their scheduled rates even when used in works contracts.",
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