Unable to integrated sass to ReactJS storybook

I tried out storybook for ReactJS. I followed this blog to create the same. Everthing is working as expected, I was able to publish the app to npm.

When I tried to add SASS support for my plugin, the app fails to run. CSS, and CSS modules are working fine. I have gone through their docs. I also tried out the suggestions reported in this issue in github. I tried downgrading the packages (css-loader, sass-loader, style-loader, & scss) that I am using. None of these helped.

Node version: 16 (I also tried with 12)

This is my package,json

{
  "name": "plugin",
  "version": "0.1.1",
  "description": "Starter template to get up and running quickly with React and Storybook",
  "main": "dist/index.js",
  "private": false,
  "files": [
    "dist",
    "README.md"
  ],
  "license": "MIT",
  "peerDependencies": {},
  "dependencies": {
    "@testing-library/jest-dom": "^5.11.4",
    "@testing-library/react": "^11.1.0",
    "@testing-library/user-event": "^12.1.10",
    "css-loader": "^6.2.0",
    "react": "^17.0.1",
    "react-dom": "^17.0.1",
    "react-scripts": "4.0.3",
    "sass": "^1.41.1",
    "sass-loader": "^10.1.0",
    "style-loader": "^3.2.1",
    "web-vitals": "^0.2.4"
  },
  "scripts": {
    "start": "react-scripts start",
    "build": "react-scripts build",
    "test": "react-scripts test",
    "eject": "react-scripts eject",
    "storybook": "start-storybook -p 6006 -s public",
    "clean": "rimraf dist",
    "compile": "npm run clean && cross-env NODE_ENV=production babel src/stories --out-dir dist --copy-files --ignore __tests__,spec.js,test.js,stories.js,stories.jsx,__snapshots__",
    "build-storybook": "build-storybook -s public"
  },
  "eslintConfig": {
    "extends": [
      "react-app",
      "react-app/jest"
    ],
    "overrides": [
      {
        "files": [
          "**/*.stories.*"
        ],
        "rules": {
          "import/no-anonymous-default-export": "off"
        }
      }
    ]
  },
  "browserslist": {
    "production": [
      ">0.2%",
      "not dead",
      "not op_mini all"
    ],
    "development": [
      "last 1 chrome version",
      "last 1 firefox version",
      "last 1 safari version"
    ]
  },
  "devDependencies": {
    "@babel/cli": "^7.15.4",
    "@babel/preset-env": "^7.15.6",
    "@babel/preset-react": "^7.14.5",
    "@storybook/addon-actions": "^6.3.8",
    "@storybook/addon-essentials": "^6.3.8",
    "@storybook/addon-links": "^6.3.8",
    "@storybook/addon-storyshots": "^6.3.8",
    "@storybook/node-logger": "^6.3.8",
    "@storybook/preset-create-react-app": "^3.1.7",
    "@storybook/preset-scss": "^1.0.3",
    "@storybook/react": "^6.3.8",
    "@storybook/testing-react": "^0.0.17",
    "cross-env": "^7.0.3",
    "react-test-renderer": "^17.0.2"
  }
}

I would very much appreciate some help. Thanks in advance. If some one could direct me to some sample code with proper SASS integration that would also be helpful