M/S Craft Interiors (P) Ltd. vs The Joint Commissioner Of Commercial ...

3. The brief facts of the case relevant for the purpose are that the appellant is a private limited company engaged in the business of interior decoration and other types of work. The appellant had purchased various goods from registered dealers under the KST Act, 1957 and used them in the execution of works contracts. The appellant claimed deduction from the total turnover of such purchases in terms of Rule 6(4)(m)(i) of the KST Rules, 1957 as per which all amounts received or receivable in respect of goods purchased from registered dealers and used in the execution of works contracts in the same form in which goods are purchased, can be claimed as deduction from the total turnover.

4. The assessing Officer issued notices for provisional assessment for the years 1998­99, 1999­2000, 2000­2001, 2001­ 2002 and 2002­2003 to deny the deduction of the value of timber, purchased from the local registered dealers claimed under Rule 6(4)(m)(i) on the ground that the timber was not used in the same form in which such goods were purchased, while executing the works contract. It was further observed that for 2 carrying out the interior decoration, the appellant purchased timber in log forms, plaster of paris, plywood, glass sheets and the said purchases have been manufactured to produce the goods which are necessary for interior decoration. The Assessing Officer further observed that as per Rule 6(4)(m)(i), the registered dealer purchases deductible from the works contract receipts is limited to transfer of the purchased goods in the same form. As per Explanation III of the said Rule “in the same form” do not include the registered dealer purchases which are either consumed or manufactured of other goods which are used in the execution of the works contract. Hence, there shall be no deductions as claimed.

6. The writ petition came to be dismissed by the learned Single Judge of the High Court vide its Order dated 7 th January, 2003 placing reliance on the judgment of E.C.I.E. Pvt. Ltd. Vs. Additional Deputy Commissioner, Commercial Taxes(Kar.) and Another 1999(114) STC 309 in which the High Court of Karnataka has upheld the constitutional validity of the said Rule. So far as the order of the Joint Commissioner of Commercial Taxes (Intelligence) dated 6 th November, 2002 is concerned, granted permission to the authority to take up the provisional assessment in furtherance to the notices dated 8 th November, 2002 and to pass an appropriate order after hearing the parties in accordance with law. Against the Order of the learned Single Judge dated 7th January, 2003, the unsuccessful appellant preferred LPA which also came to be dismissed with supportive reasons vide judgment impugned dated 16 th September, 2006 which is a subject matter of challenge in appeal before us.

30. Consequently, in our considered view, the appeal is without substance and accordingly dismissed. It will be open for the assessing authority to proceed with the impugned assessment proceedings initiated pursuant to notices dated 8 th November, 2002 independently without being influenced/inhibited by the observations made by us and conclude it, after affording opportunity of hearing to the appellant, expeditiously in accordance with law. No costs.

31. Pending application(s), if any, stand disposed of.