Dynamo lamps are accessories to cycles and not component parts, and the assessees' failure to use them as component parts constituted a violation of the Tamil Nadu General Sales Tax Act, 1959, section 45(2)(e), attracting the penalty under section 23.

KANAKARAJ, J.

These four revision petition 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 follow :

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 section3(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

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 section23 of the Act notices were issued, objections called for the penalty levied under section23 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

2. 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

3. 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." *

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 section23 of the Act, will arise. The penalties were therefore deleted. Hence the revision petitions.

4. 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 section23 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.

5. In Indo-Japanese Industries Ltd. v. Assistant Collector of Central Excise 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,