TaxTMI 
TaxTMI 
1976 (1) TMI 164
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....y. The assessees had used motors and pistons in the manufacture of air compressors and car washers. These motors and pistons were purchased by them issuing form XVII to the sellers and paying the concessional rate of sales tax. The taxable turnover determined by the assessing authority included the sales of air compressors and car washers in which they had used these motors and pistons, which they have purchased after issuing form XVII. With respect to these air compressors and car washers, the assessees claimed that they were not used with electrical energy and that they were interchangeable with oil-engine and petrol engines and that, therefore, they would not fall under item 41 of the First Schedule and that, therefore, that particular t....
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....e, in view of the Tribunal's order dated 30th July, 1969, in respect of the assessment year 1964-65, the assessing officer held that the turnover relating to the sale of air compressors and car washers would not fall under item 41 of the First Schedule and, accordingly, liable for multi-point tax. Thereafter, the assessing authority issued a notice under section 23 of the Tamil Nadu General Sales Tax Act in respect of the assessment years 1964-65 and 1968-69 proposing to levy penalty on the ground that the assessees had used the motors and pistons, which were purchased by them on issuing form XVII declaration, in the manufacture of goods which did not fall under any of the items mentioned in the First Schedule. The assessees were contend....
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....illed in and signed by the dealer to whom the goods are sold, containing the prescribed particulars in a prescribed form obtained from the prescribed authority. Form XVII. which is the prescribed form, is as follows: "FORM XVII (See rule 22) Form of declaration Name and address of dealer to whom issued. Registration certificate number of the dealer to whom issued. Officer issuing the form Date of issue Seal of issuing authority. To (Seller) Certified that the goods specified in the First Schedule and detailed below, and ordered for in our purchase order No. dated purchased from you as per bill/cash memo. stated below supplied under your chalan No. are for use by me as component part of other goods specifie....
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....e facts on which a penalty has been imposed under this section." It is the argument of the learned counsel for the petitioners that form XVII, set out above, contains two declarations or undertakings, one to the effect that the dealer who issued the declaration and purchased goods would use the goods purchased as component part of another goods specified in the First Schedule, which he manufactures inside the State for sale, and the other undertaking is that he shall not sell the goods purchased under the cover of that form as spare parts. According to the learned counsel, prosecution might be possible, under section 45(2) in respect of contravention of any one of these two conditions or both, but the levy of penalty under section 23 cou....
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.... in any other goods not mentioned in the First Schedule, manufactured by the assessee. There can be no turnover relating to the sale of such goods if the goods had formed a part of another manufactured item. The use of the words "turnover" and "sale of such goods" in section 23 read with the words "if any person purchasing goods is guilty of an offence under clause (e) of sub-section (2) of section 45" clearly show that the section contemplates only a contravention of the declaration in form XVII by selling the goods purchased under the cover of the form as spare parts and not a case where it was used as a component part of some other goods, which is not specified in the First Schedule. The learned Government Pleader raises two contentio....