The Judgment of the Court was delivered by

Kanakaraj, J.:— These four revision petitions by the Revenue are against the common order of the Tamil Nadu Sales Tax Appellate Tribunal dated 3rd August, 1982, in four appeals preferred by the respondent-assessees in respect of four assessment years 1973-74, 1974-75, 1975-76 and 1976-77. The facts are as follows:

The assessees are manufacturers and dealers in cycle and cycle parts. They purchased dynamo lamps from one T.I Millers Ltd., Madras by issuing form XVII declaration under section 3(3) of the Tamil Nadu General Sales Tax Act, 1959 (hereinafter called “the Act”). Consequently their sellers charged concessional rate of tax at 3 per cent on their sales and paid tax at that rate. The turnover for the four years were as follows:

1973-74 …. Rs. 2,17,874.56 1974-75 …. Rs. 1,89,193.08 1975-76 …. Rs. 95,705.17 1976-77 …. Rs. 1,30,665.00

2. The assessees sold the dynamo lamps with the cycles. The Assistant Commissioner found that the assessees had not used the dynamo lamps as component parts of the cycles but only as accessories to; the cycles. Consequently he found that the assessees ought not to have given the form XVII declaration enabling payment of concessional rate of tax. Holding it as a violation under section 23 of the Act notices were issued, objections called for and penalty levied under section 23 of the Act as follows:

1973-74 …. Rs. 13,072 1974-75 …. Rs. 11,352 1975-76 …. Rs. 5,742 1976-77 …. Rs. 7,840

3. On appeal to the Deputy Commissioner, the finding was upheld, but the penalty reduced as follows:

1973-74 …. Rs. 9,804 1974-75 …. Rs. 8,524 1975-76 …. Rs. 4,306 1976-77 …. Rs. 5,879

4. On further appeal to the Sales Tax Appellate Tribunal, the appeals were allowed. The Tribunal held as follows:

“Now the dividing line between ‘accessories’ and ‘component parts’ is very thin and hence it follows that the appellant bona fide believed that the ‘dynamo lamps’ were component parts and not accessories. This is more so when we note that item 38 uses the expression ‘part’ in conjunction with accessories. Hence we are satisfied that at any rate, there was no mala fides in giving form XVII declarations and that the appellants had acted bona fide in the matter.”

5. The Tribunal also found that the dynamo lamps had been used and sold along with the cycles. According to the Tribunal only if the dynamo lamps had been sold as such the question of penalty under section 23 of the Act, will arise. The penalties were therefore deleted. Hence the revision petitions. The contention of the Revenue is that dynamo is not a component part of cycle, but can only be considered as an accessory. Therefore the assessee had committed an offence under section 45(2)(e) of the Act by filing form XVII declaration and hence liable under section 23 of the Act to pay penalty. On the other hand Mr. Inbarajan, learned counsel for the assessees, submits that dynamo lamps are in reality component parts of cycles and not merely accessories. He refers to certain decisions on the point, to which we will make a reference a little later. He also argues that in any event the assessees had sold the dynamo lamps along with the cycles and assessees action in filing form XVII declarations was under a bona fide impression and does not call for penalty.

6. In Indo-Japanese Industries Limited v. Assistant Collector, Central Excise, Calcutta, (1986) 24 ELT 527 (Cal) the question was whether cycle dynamo lamps were eligible for the grant of exemption under Notification No. 86/79, dated 1st March, 1979—Item 68 of the Central Excise Tariff. The contention of the assessees was that cycle dynamo lighting set was an essential part of a cycle and therefore eligible for grant of exemption. The notification exempted “cycle and parts of cycle”. The contention of the Revenue was that the dynamo lamp was only an accessory to a bicycle and therefore the exemption notification will not apply to the assessees. The Calcutta High Court found as follows:

“In my opinion, the phrase ‘cycle and cycle parts’ as appearing in the Notification dated 1st March, 1979, must be understood in the popular sense and in the vernacular of the commercial world at the time the notification granting exemption was issued by the Central Government. The term ‘cycle parts’ has been used by the Government in various notifications and circulars issued from time to time in a broad sense to include dynamo lamps. The word has not been defined in the Excise Act. There is no reason to assume that the Government intended to depart from the usual sense and used the expression ‘cycle parts’ in a different and restricted sense when the notification granting exemption of ‘cycle parts’ from excise duty was published on 1st March, 1979.”

7. The court observed that a manufacturer may or may not provide lamps when the cycles are sold, but in the commercial and popular sense a dynamo lamp must be regarded as “cycle parts”. In Mehra Brothers v. Joint Commercial Officer, Madras, [1991] 80 STC 233, the Supreme Court held that car seat covers and upholstery manufactured and sold in the course of his business by a dealer are “accessories” to motor vehicles. The Supreme Court observed whether an article or part is an “accessory” cannot be decided with reference only to its necessity to the effective use of the motor vehicle as a whole and that general adaptability may be relevant, but it is not by itself conclusive. On the other hand in Deputy Commissioner of Agricultural Income-tax and Sales Tax v. Union Carbide India Limited, [1976] 38 STC 198 the Kerala High Court was dealing with the leakproof or dry-cell batteries and whether they are spare parts or accessories of transistors. Observed the Kerala High Court “A thing is a part of the other, if the other is incomplete without it. A thing is not an accessory of the other, if the other thing, although complete in itself, cannot function without it”.

“To restate the principle: A thing is a part of the other, if the other is incomplete without it. A thing is not an accessory of the other, if the other, although complete in itself, cannot function without the thing.”

8. Accordingly the Kerala High Court concluded that the transistor is complete without the battery. The batteries are not parts of the transistors, for the transistors are complete without them. This judgment of the Kerala High Court was followed by Mohan, J. (as he then was) in T.I Miller Ltd. v. Union of India, (1987) 31 ELT 344 (Mad.). The learned Judge had to deal with the very same item dynamo lamp and held that it is not a component of the cycle but only accessory. The learned Judge has considered several decisions on the point and holds that even accepting the popular commercial view it cannot be held that the dynamo lamp was component part of the cycle. Observed the learned Judge:

“I am of the opinion that the stand of the Revenue is right. What is important is whether cycle can be sold commercially without dynamo. Or again, to put the proposition differently if the cycle could function without the dynamo. Certainly, the dynamo cannot be a part.”

9. Learned Judge also observed that the mere fact that the Madras Traffic Port Rule 43 requires rider of a cycle to have a light while riding a bicycle during night it cannot be held that dynamo lamp was component part of the cycle.

10. Having given our anxious consideration to the question, we are inclined to accept the opinion of Mohan, J. (as he then was) in T.I Miller Ltd. v. Union of India, (1987) 31 ELT 344 (Mad.). With respect we are unable to follow the decision of the Calcutta High Court in Indo-Japanese Industries Limited v. Assistant Collector, Central Excise, Calcutta, (1986) 24 ELT 527, because we feel that dynamo lamps have only a functional utility when the cycle is taken out during night. It cannot also be disputed that for the purpose of conforming to the Traffic Rules it is enough if the cyclist carries some kind of lamp, be it a dynamo lamp or a battery-operated lamp or an oil lamp. We therefore hold that dynamo lamps cannot be construed as component parts of the cycle. Consequently the assessees ought not to have issued form XVII declaration enabling the seller to charge sales tax at the concessional rate of 3 per cent under section 3(3) of the Act. It follows therefore that the assessees had committed an offence within the meaning of section 45(2)(e) of the Act, because they had not used the articles purchased by them as a component part of the cycle itself. Section 23 of the Act is therefore rightly attracted and the imposition of penalty by the assessing authority and as modified by the appellate authority, was therefore perfectly in order. However, the Tribunal has relied on Elgi Equipments (Private) Limited v. The State Of Tamil Nadu, [1977] 40 STC 310 (Mad.) and holds that only if the dynamo lamps had been sold as such that the penalty under section 23 of the Act, will be attracted. Inasmuch as the assessees had sold the dynamo lamps along with the cycles the Tribunal was of the opinion that the penalty had to be deleted. In the said decision of the High Court, the assessees had used motors and pistons in the manufacture of air-compressors and car washers. They purchased motors and pistons by issuing form XVII declaration to their sellers and paid a concessional rate of sales tax. The sale of air-compressors and car washers in which the assessees had used motors and pistons, purchased by issuing form XVII declarations, were taxed by the assessing officer. It was held that the said articles would fall under item 41 of the First Schedule. But the Tribunal, on appeal held that the sale of the said articles could not be brought under entry 41 of the First Schedule and liable to be taxed at multi-point rates. The assessing authority issued a notice under section 23 of the Act in respect of two assessment years during which the assessees had used the motors and pistons which had been purchased by them on issuing form XVII declaration in the manufacture of air-compressors, and car washers, which did not fall under any of the items mentioned in the First Schedule. In short, the levy of penalty under section 23 of the Act was called for because the goods purchased under form XVII declarations had not been used for the manufacture of other goods mentioned in the First Schedule, as contemplated by section 3(3) of the Act. The Division Bench held that contents of form XVII declaration comprises of two parts. In the first part he undertakes to use the goods as component parts of other goods specified in the First Schedule. In the second part he undertakes not to sell the goods purchased under cover of the form XVII as spare parts. The Division Bench held that section 23 contemplates only a contravention of the declaration in form XVII by selling the goods purchased 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 arguments therefore in this case is that inasmuch as dynamo lamps had been sold along with the cycles, the question of penalty under section 23 of the Act will not arise. We do not agree with this contention. This is because, in that case the question was whether the assessee manufactured goods falling under the First Schedule or not. In the present case that question does not arise. We are only concerned with the question whether the assessees having purchased the goods under form XVII declarations, did not utilise the goods as component parts of cycles. We have already held that he did not use the articles purchased as component parts of cycle. In other words the assessees had failed without reasonable cause to make use of the goods for the “declared purpose” as mentioned in section 45(2)(e) of the Act. We are therefore of the opinion that the Tribunal had fallen into an error in holding that the assessees had sold the dynamo lamps along with the cycles and therefore the question of penalty under section 23 of the Act will not arise.

11. For what we have stated above we set aside the order of the Tribunal and restore the order of the Deputy Commissioner (appellate authority). The tax revision cases filed by the Revenue are accepted and allowed. There will however be no order as to costs.

12. Petitions allowed.