RAMASWAMI, J.

The assessees are manufacturers and dealers in service station equipments such as air compressors, car washers, hydraulic lifts, etc. For the assessment year 1964-65, they reported a total and taxable turnover of Rs. 30, 73, 594.69 and Rs. 9, 42, 804.38, respectively. The assessing officer determined the total and taxable turnover at Rs. 32, 36, 332.19 and Rs. 9, 53, 424.38 respectively. 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 inter-changeable 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 turnover would have to be assessed at multi-point tax. But the assessing authority held that these air compressors and car washers are fitted with motors, which could be used only by electrical energy and, therefore, would fall under item 41 of the First Schedule. Accordingly, the assessing officer held that this turnover was liable to be taxed at 6 per cent.

An appeal preferred to the Appellate Assistant Commissioner by the assessees was unsuccessful. On a further appeal, however, the Tribunal held that the air compressors and car washers were not electrical goods and that they could not be brought under entry 41 of the First Schedule for the purpose of single point levy of tax at 6 per cent and, accordingly, made it liable at the rates prescribed for multi-point levy. This order of the Tribunal is dated 30th July, 1969.When this matter was pending before the Tribunal, the assessees submitted the return for the years 1965-66, 1966-67 and 1967-68. But, in these returns, they did not claim that similar air compressors and car washers in which they have used the motors and pistons which were purchased by them after issuing form XVII as falling outside item 41. Therefore, the assessing authority subjected them to tax at 6 per cent as falling under item 41 of the First Schedule.

In respect of the year 1968-69 also, though the assessees did not claim that the turnover relating to the sale of air compressors and car washers did not fall outside item 41 of the First Schedule, 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 contending that section 23 was not applicable to them and that it would apply only if they had sold the motors and pistons purchased by them, as spare parts, and not as component parts of the goods manufactured by themselves. This contention was not accepted by the assessing officer as also the appellate authority and the Tribunal. They held that the assessees have misused the articles purchased by them on issuing form XVII declaration and that, therefore, they are liable for levy of penalty under section 23. The ultimate penalty levied by the Tribunal was Rs. 28, 400 for 1964-65 and Rs. 45, 200 for 19