Penalty on declared goods is confined to sale of the goods themselves, not their use as manufacturing components.

Section 23 of the Tamil Nadu General Sales Tax Act is discussed as a penalty provision linked to the sale turnover of the very goods purchased on form XVII declaration. The text distinguishes between a declaration to use goods as component parts in manufacturing and the separate undertaking not to sell them as spare parts. On the stated construction, the provision applies only where the declared goods themselves are sold as spare parts, and not where they are consumed as components in the manufacture of other goods. A broader interpretation is rejected because the relevant turnover then belongs to the finished article, not the purchased goods.

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Issues: Whether penalty under section 23 of the Tamil Nadu General Sales Tax Act could be levied when goods purchased on form XVII declaration were used as component parts in the manufacture of goods not specified in the First Schedule, or whether the section applied only where such goods were sold as spare parts.

Analysis: The declaration in form XVII contained two distinct undertakings: one to use the goods as component parts of other goods manufactured inside the State for sale, and another not to sell the goods as spare parts. Reading section 23 with section 45(2)(e), the penalty provision was held to be linked to the sale turnover of the very goods purchased under the declaration and not to their use as components in another manufactured article. On that construction, the section covered only the case where the purchaser, after giving the declaration, sold the goods themselves as spare parts. A broader reading was rejected because once the goods formed part of another article, the relevant turnover was that of the finished article and not of the purchased goods.

Conclusion: Section 23 was held inapplicable to misuse by use of the goods as components in the manufacture of non-scheduled goods; it applied only where the declared goods were sold as spare parts. The penalty order was therefore unsustainable.

Final Conclusion: The penalty levied on the assessees was set aside, and the revision cases succeeded with costs.

Ratio Decidendi: A penalty provision tied to the turnover relating to the sale of goods purchased under a declaration must be confined to the specific contravention expressly contemplated by that provision, and cannot be extended by implication to a different breach of the declaration.

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