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2019 (7) TMI 113 - SC - VAT and Sales TaxValidity of Rule 6(4)(m)(i) of the Karnataka Sales Tax Rules, 1957 read with Explanation III to Rule 6(4) of the said rules - interpretation of statute - scope of charging section - whether the condition of ‘use in the same form in which such goods are purchased’ under Rule 6(4)(m)(i) of the KST Rules expands the scope of charging section i.e. Section 5B under KST Act, 1957? - 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 - AO denied deduction from purchases from works contract receipts applying Rule 6(4)(m)(i). HELD THAT:- Section 5B of the KST Act and Rule 6(4)(m)(i) of the KST Rules operate in different spheres. Section 5B is a charging provision for levy of sales tax whereas Rule 6(4)(m)(i) is a provision for deduction from tax. Under Section 5B, tax can be levied on transfer of property in the goods whether as goods or in some other form whereas Rule 6(4)(m)(i) provides for a deduction in respect of the goods which have already suffered tax and which are used in the same form. Thus, it appears to be in clear consonance with the charging provision and does not militate against Section 5B of KST Act, 1957. This Court in State of Tamil Nadu Vs. Pyare Lal Malhotra and Others [1976 (1) TMI 151 - SUPREME COURT] has held that if the separate commercial commodities emerge out of the goods already taxed earlier, the new commercial commodity is liable to sales tax provided there is a law to this effect - It can be inferred from this case that Sales tax can be levied on the same goods only once so long as they retain their identity of goods of a particular type, and If separate commercial commodities emerge out of the (goods already taxed earlier), then the said new commercial commodity is liable to sales tax. What emerges from the scheme of the Act and Rules framed thereunder is that Rule 6(4)(m)(i) purports to grant benefit to the assessee by allowing deductions for the value of goods which have already suffered taxation and which goods substantially retain their original identity while being used in the execution of a works contract. Explanation III to Rule 6(4) clarifies it further by categorically providing that in case the goods are transformed into a different commodity which then is used in the execution of works contract, then the benefit of deduction cannot be availed. It is trite law that tax provisions granting exemptions/concessions are required to be strictly construed as recently held by this Court in M/s. Achal Industries Vs. State of Karnataka 2019 (3) TMI 1483 - SUPREME COURT . There is no variance between Rules 6(4)(m)(i) read with Explanation III and Section 5B of the KST Act, 1957 and what is contended by the appellant in assailing the validity of Rule impugned hereunder is misconceived and without substance. Provisional assessment served under Section 28(6) - HELD THAT:- Whether the assessee was eligible under Rule 6(4)(m) (i) is a question of fact which has to be determined in the assessment proceedings and since the provisional assessment has not been finalised due to pendency of the instant proceedings, it may not be advisable for this Court to dilate on the subject issue of the notices served upon the appellant at this stage and leave it open to the appellant to address before the assessing authority in the pending appropriate assessment proceedings, if so advised. Appeal dismissed - decided against appellant.
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