The main legal point established in the judgment is that once a valid declaration form is filed, the selling dealer is entitled to the concessional rate and is not obligated to question the declaration's validity or the actual use of the goods by the purchasing dealer.

KANAKARAJ, J.

For the year 1978-79, the assessee/respondent reported a total and taxable turnover of Rs. 83, 31, 314.91 and Rs. 83, 22, 376, respectively. The assessee claimed concessional rate at 3 per cent. on the sales of transformer oil to the tune of Rs. 7, 43, 883.79 on the production of form XVII prescribed under the proviso to section3(3) of the Tamil Nadu General Sales Tax Act, 1959. In other words the transformer oil was claimed as a component part in the manufacture of other goods inside the State by the person issuing the declaration form. The assessing authority proposed to reject the claim for the concessional rate and sought to levy at the rate of 8 per cent. and objections were called for. The assessee explained that the purchasing dealer that he was using the transformer oil as a component part and on the production of the declaration form the selling dealer (assessee) is entitled to the concessional rate of 3 per cent. However, the assessing authority relied on the circular issued by the erstwhile Board of Revenue in BPRT. 13/79 stating that transformer oil is not a component part of transformer and the concessional rate under section3(3) of the Act cannot be made applicable. Accordingly, the said turnover was taxed at 8 per cent.

2. On appeal, the Appellate Assistant Commissioner held that transformer oil is only used in the process of cleaning or cooling and is not therefore a component part of the transformer. He also relied on the above-said circular and rejected the claim of the assessee. On second appeal, the Tribunal relying on a decision reported in Premier Electro-Mechanical Fabricators v. State of Madras 1968 (22) STC 269

(Mad.), held as follows :

"Respectfully following the decision of our High Court we hold that once valid from XVII declarations have been filed, the question whether the transformer oil is a component part or not, as certified by the buyer, is beyond the jurisdiction of the assessing officer. It is not in dispute that the declarations have been otherwise properly filed. We, therefore, hold that the turnover of Rs. 7, 43, 883.79 is taxable at the lower concessional rate of 3 per cent. as against 8 per cent. The assessment shall be modified accordingly." *

3. The Revenue has come up in revision.

4. The argument of learned Additional Government Pleader (Taxes) is that the very look at the item, ex facie shows that the transformer oil cannot be a component part of the transformer. In such apparent cases it would be doing violence to section3(3) of the Act, if the proviso is given effect to blindly. The ratio of the judgment in Premier Electro-Mechanical Fabricators v. State of Madras 1968 (22) STC 269(Mad.) followed in other cases, argues the Government Pleader, required reconsideration. On the other hand, Mr. C. Natarajan, the learned counsel for the respondent says that the transformer oil is an identifiable constituent of the finished product. According to him, the oil is kept inside the finished product and sealed. Secondly, it is not the duty of the selling dealer to question the declaration form given by the purchasing dealer to verify whether the particular article is used as a component part or not.

5. To appreciate the rival contentions we will now set out the relevant provision, namely, section3(3) of the Act with the chronological amendments it had undergone. When the Act was introduced on March 11, 1959 the section stood as follows :

"Notwithstanding anything contained in sub-section (1) or sub-section (2), the tax payable by a dealer in respect of any sale of goods mentioned in the First Schedule by such dealer to another for use by the latter as component part of any other goods mentioned in that Schedule, which he intends to manufacture for sale inside the State, shall be at the rate of only one per cent. on the turnover relating to such sale :

Provided that the provisions of this sub-section shall not apply to any sale unless the dealer selling the goods furnishes t