1. This tax revision case has been filed against the order of the Sales Tax Appellate Tribunal and involves consideration of a simple question as to whether the assessee is eligible for the concessional rate of tax provided Under Section 3(3) of the Tamil Nadu General Sales Tax Act. The assessee imports crude oil and refines it at the refinery at Manali in Tamil Nadu. In this case the assessee sold what are called lube base stocks and claimed concessional rate of tax on a turnover of Rs. 37,78,008.59 at 2 per cent as against the general rate of tax of 7 per cent. There is no dispute that in case the rate of 2 per cent was not applicable to the said sale, then the assessee would have to be taxed at the rate of 7 per cent. As regards the claim of concessional rate of tax at 2 per cent, the assessee stated that sales to the extent mentioned above were effected on the strength of form XVII declarations made by the purchasers, namely, Indian Oil Corporation, who had purchased these base oils and blended them to make lubricants. The said lubricants were sold to Esso Eastern Inc., Caltex India Limited and Burmah Shell Oil Storage and Distributing Company of India Limited. The lubricants were manufactured by the Indian Oil Corporation as per formulae given to them from the lubricating base oils (lube base stocks) obtained from the assessee. It was represented in that connection that the Indian Oil Corporation as well as the three oil companies utilised the said stocks for blending them to form lubricants of specified viscosity according to certain formulae. The assessing authority as well as the appellate authority took the view that though the purchaser had filed form XVII, the purpose for which it was purchased would not qualify for the concessional rate, as, according to the said authorities, the lube base stocks would not form 'component parts' of the lubricants manufactured by it. The assessee appealed to the Sales Tax Appellate Tribunal and the Tribunal after elabo-rately examining the facts and contentions, came to the conclusion that the assessee was entitled to the concessional rate of tax in respect of sales of lube base stocks for which proper declarations in form XVII had been filed. It was urged on behalf of the State that the declaration forms would require further scrutiny as to whether they were in order in respect of all the relevant particulars. It was stated on behalf of the State, the respondent before the Tribunal, that the sales tax authorities thought that they could reject the declarations merely on the ground that the lube base stock was not visually identifiable in the lubricants sold by the purchasing dealer and that, therefore, they had not subjected the declarations for proper scrutiny. As the Tribunal considered that the matter would have to be gone into by the Appellate Assistant Commissioner, it set aside the order of the Appellate Assistant Commissioner in so far as this point was concerned and remanded the matter so as to enable him to verify the declaration forms and allow the concessional rate if they were in order without going into the issue whether the declaration in form XVII by the purchasing dealer that it used the goods purchased as a 'component part' is correct or not. It is this order of the Sales Tax Appellate Tribunal dated 19th October, 1973, that is now under revision at the instance of the State of Tamil Nadu.
2. Before the Tribunal, there was an enhancement petition filed by the State to the effect that the Appellate Assistant Commissioner should not have deleted the assessment on a turnover of Rs. 5,71,285.27 assessed at 3 per cent on the ground that it was not the assessee's business to deal in scrap materials. In view of the decision in the case of State of Tamil Nadu v. Burmah Shell Oil Storage and Distributing Co. of India Ltd.  31 S.T.C. 426, the Tribunal held that though the turnover as such may be assessed, still all the details were not available before it and it therefore sent the matter back to the Appellate Assistant Commissioner for purpose of appropriate investigation of the facts regarding that turnover and decision thereon in accordance with law. This point was also the subject of revision in the present proceedings.
3. We shall first take up the question as to whether the decision of the Tribunal with reference to the claim of the assessee Under Section 3(3) of the Tamil Nadu General Sales Tax Act, 1959, was proper. Section 3(1) provides that every dealer whose total turnover for a year exceeds certain specified amount should pay tax for each year at the rate specified on his taxable turnover. Section (2) of Section 3 provides that notwithstanding anything contained in Sub-section (1) in the case of goods mentioned in the First Schedule, the tax under this Act shall be payable by a dealer at the rate and only at the point specified therein on the turnover in each year relating to such goods whatever be the quantum of turnover in that year.
4. Sub-section (3) of Section 3, which is material for our present purpose, runs 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 inside the State for sale shall be at the rate of only three 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 to the assessing authority in the prescribed manner a declaration duly filled 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.
5. There is an explanation running as follows:
For the purposes of this Sub-section, 'component part' means an article which forms an identifiable constituent of the finished product, which along with others goes to make up the finished product and which is identifiable visually, or by a mechanical process and not by a chemical process.
6. This explanation came to be substituted by Act 27 of 1970 with effect from 1st April, 1959, when the Tamil Nadu General Sales Tax Act, 1959, came into force. Before the substitution there was another explanation to Section 3(3) of the Act, which ran as follows :
For the purposes of this Sub-section, 'component part' means an article which forms an identifiable constituent of the finished product and which along with others goes to make up the finished product.
7. The provision of Section 3(3) read with the explanation as it was in force before the Amendment Act, 1970, came up for consideration before this court in R. M. Krishnaswamy Naidu & Sons v. State of Madras  16 S.T.C. 671) In that case, the assessee sold groundnut oil to manufacturers of vanaspati and claimed the concessional rate of tax Under Section 3(3) of the Act. In dealing with this claim, this court pointed out :
In order to be eligible for the lower rate of tax Under Section 3(3) of the Act, two conditions are required : one is that some item of goods contained in the First Schedule of the Act must be used as a component part of some other item of goods also mentioned in that schedule ; and the other is that a process of manufacture must be involved in the use of one item for the production of the other.
8. With reference to the groundnut oil which went into the manufacture of vanaspati, this court was satisfied that the expression 'identifiable constituent' used in the explanation, as it was then in force, must necessarily be given a broad meaning, for the nature of the identity must alter, having regard to the process of manufacture to which the article used is subjected and that the identity was not necessarily required to be visual. It was held that the sale of groundnut oil was eligible for concessional rate of tax. This decision was the subject-matter of an appeal to the Supreme Court and the Supreme Court's decision is reported in State of Madras v. R. M. Krishna-swami Naidu [l970] 26 S.T.C. 42. In the course of its judgment, the Supreme Court observed:
It was, however, urged on behalf of the State that an article is a component part within the meaning of the explanation to Section 3(3) of the Act only if it is capable of being identified visually in the final product. We are unable to accept that contention. The legislature has not provided that before a component part may qualify for the concessional rate of tax, it must be capable of visual identification in the finished product. A reference to the entries in the First Schedule clearly indicates that the benefit of Section 3(3) may not be obtained in respect of any raw material supplied for manufacture of finished products, if the test of visual identification be adopted. In our judgment, if the component is capable of identification by a chemical or other test as a component of a finished product falling within the schedule, it would be an identifiable constituent within the meaning of Section 3(3), explanation and the sale of the component would qualify for the concessional rate of tax. The High Court was, in our judgment, right in holding that the respondents were liable to tax only Under Section 3(3) and not Under Section 3(1) of the Act.
9. The explanation that was substituted by Act 27 of 1970 has taken note of this decision and has sought to alter the law retrospectively.
10. The section with the new explanation came up for consideration before this court in Premier Eleetro-Mechanical Fabricators, Madras-2 v. State of Madras  22 S.T.C. 269. The assessee in that case sold frames, nuts, tubes, rollers, wheels, etc. and claimed the benefit of Section 3(3). He produced a declaration in form XVII as prescribed in terms of the proviso to Sub-section (3) of Section 3. The assessing authority disallowed the claim on the ground that the sale bills did not show the name and details of the machinery. Nevertheless, the assessment was made at the rate of 3 per cent treating the sales as falling within the First Schedule of the Act. The Appellate Assistant Commissioner held that the turnover was eligible for the concessional rate. In exercise of the suo motu powers of revision, the Board of Revenue upset that order and restored the order of the assessing authority. The Board of Revenue propounded the question for its consideration as whether the goods sold by the dealer as such had been used as component parts as contemplated in Section 3(3) and, on investigation, it found that the goods supplied by the assessee underwent physical changes such as drilling of holes, sizing of the thickness, etc. It is on this basis that the Board interfered with the order of the Appellate Assistant Commissioner. When the matter came on appeal before this court against the order of the Board, this court pointed out :
What Section 3(3) enacts is that, notwithstanding what is contained in Sub-section (2), a dealer is entitled to the concessional rate as a matter of right, provided he satisfied the requisites of that Sub-section. The requisites are threefold : (1) The goods, which are the subject-matter of sale, should be those mentioned in the First Schedule, (2) the sale must be to another dealer and (3) the goods sold should be for the use by the purchaser as component parts of any other goods mentioned in the First Schedule, which he intends to manufacture inside the State for sale. If these requisites are satisfied, the lower rate of tax under Sub-section (3) will apply..The misapprehension of the department is particularly in respect of the third requisite. The assessee satisfied the requisite, if he complies with the proviso and he is not called upon, beyond production of a declaration in form XVII, to show that the declaration has been given effect to. It is true that, in order to satisfy the third requisite, the goods sold should be for use by a purchasing dealer as component parts of some other goods to be manufactured. But the manner in which the seller has to satisfy the requisite is as provided in the proviso to the Sub-section, namely, the production of the declaration in the prescribed form. Once that is done, there is no further obligation on the part of the selling dealer and he will automatically be entitled to the concessional rate. If the declaration turns out to be false, in the sense that the goods purchased have not been used as declared in the prescribed form, the purchaser is exposed to the penalties provided by Section 23 and Section 45(2)(e). If the purchaser will make a false declaration or a declaration which he does not comply with he would do so under peril of meeting those penalties. But, on that account, the selling dealer is not deprived of the concessional rate.
11. This decision has been followed in E.E.C.P. Ltd. v. Joint Commercial Tax Officer, Avanashi Road Division, Coimbatore-12  30 S.T.C. 146.
12. The result of this decision is that the production of form XVII would make the dealer eligible for the concessional rate of tax provided in Section 3(3). Learned Additional Government Pleader, however, contended that this is not the correct position. According to him, the State would be justified in going into the question as to whether the goods sold were actually used in the manufacture as component parts and unless it was satisfied that the goods sold were actually used as component parts, the concessional rate of tax Under Section 3(3) would not apply. He referred us to the passage in the judgment of this court in Krishnaswamy Naidu Sons v. State of Madras  16 S.T.C. 671, which we have already extracted above. Learned Additional Government Pleader laid great emphasis on the use of the words 'must be' in the said passage. According to him, this passage showed that the use of the particular item as a component part of another manufactured article required to be established in each case before the assessing authority. We are unable to understand the passage in the manner done by the learned Additional Government Pleader. We consider that this court was not trying to lay down any such condition that concession Under Section 3(3) would be available only in cases where the assessee established that the goods sold had gone into another manufactured product as a component part thereof by a third party manufacturer. Such a problem was not in issue before this court in that case and, therefore, we do not consider that this court intended to lay down any such test as claimed by the learned Additional Government Pleader.
13. Learned Additional Government Pleader drew our attention to another decision in Deputy Commissioner of Commercial Taxes, Tiruchirapalli Division v. Dhanalakshmi Trading Company  31 S.T.C. 113. That was a case in which ground-nut oil was used for the manufacture of vanaspati. The seller of the ground-nut oil was eligible for the concessional rate of tax Under Section 3(3). As the Tribunal has accepted the claim of the assessee, the matter came as a revision to this court. The assessee was not present nor was he represented in this court and, in the course of the judgment, this court pointed out that the effect of retrospective operation given to the amended explanation resulted in the assessee not getting the benefit of Section 3(3) as the groundnut oil is not a visually identifiable constituent of the finished product. The attention of the court was not drawn to the decision of the Bench in Premier Electro-Mechanical Fabricators v. State of Madras  22 S.T.C. 269 and no argument was advanced on behalf of the assessee before it, because the assessee was not represented in that case. We do not therefore understand this decision as in any manner justifying the stand taken by the learned Additional Government Pleader before us, as if even after furnishing the declaration form, the assessee had to establish that the goods actually went into the manufacture of the product finally sold by the purchaser. Apart from producing a certificate, it is not clear how an assessee could be expected to prove that the component has actually gone into the manufacture by the purchaser.
14. In fact with reference to a similar production of a certificate, the Supreme Court had occasion to go into the question as to whether apart from the production of the certificate, the assessee had to satisfy any further conditions in State of Madras v. Radio and Electricals Ltd.  18 S.T.C. 22. The assessee was carrying on the business in electrical equipment and was registered as a dealer under the Central Sales Tax Act. The Bombay State Electricity Board, Sau-rashtra, purchased transformers and other goods of the total value of Rs. 1,42,020 from the assessee and the Electricity Board claimed in a proceeding for assessment under the Central Sales Tax Act that they were liable to pay tax only at the rate of 1 per cent on the turnover Under Section 8(1) of the Act. The Deputy Commercial Tax Officer rejected the claim. The Appellate Assistant Commissioner, on appeal, confirmed the order of the Deputy Commercial Tax Officer. Further appeal to the Sales Tax Appellate Tribunal also failed. When the matter came up before this court, it was held that when the selling dealer within this State produced a certificate in form C setting out one or more of the purposes set out in Section 8(3)(b) of the Central Sales Tax Act and if the sales tax authorities on behalf of the State did not deny that the purchasing dealer was a registered dealer, the selling dealer could not be denied concessional rate of tax under the Act, even if it transpired that the purchasing dealer had utilised the goods for purposes other than those mentioned in the certificate of registration. It is this case which went on further appeal to the Supreme Court. In the course of the judgment in that case it was held:
The Act seeks to impose tax on transactions, amongst others, of sale and purchase in inter-State trade and commerce. Though the tax under the Act is levied primarily from the seller, the burden is ultimately passed on to the consumers of goods because it enters into the price paid by them. Parliament with a view to reduce the burden on the consumer arising out of multiple taxation has, in respect of sales of declared goods which have special importance in inter-State trade or commerce and other classes of goods which are purchased at an intermediate stage in the stream of trade or commerce, prescribed low rates of taxation, when transactions take place in the course of inter-State trade or commerce. Indisputably the seller can have in these transactions no control over the purchaser. He has to rely upon the representations made to him. He must satisfy himself that the purchaser is a registered dealer and the goods purchased are specified in his certificate : but his duty extends no further. If he is satisfied on these two matters, on a representation made to him in the manner prescribed by the Rules and the representation is recorded in the certificate in form C, the selling dealer is under no further obligation to see to the application of the goods for the purpose for which it was represented that the goods were intended to be used. If the purchasing dealer misapplies the goods, he incurs a penalty Under Section 10. That penalty is incurred by the purchasing dealer and cannot be visited upon the selling dealer....There is nothing in the Act or the Rules that for infraction of the law committed by the purchasing dealer by misapplication of the goods after he purchased them, or for any fraudulent misrepresentation by him, penalty may be visited upon the selling dealer.
15.The position under the Tamil Nadu General Sales Tax Act is more or less identical in the case of any false representation made by the purchasing dealer, there are penalties prescribed under the Act. Section 23 of the Act provides that if any person purchasing goods is guilty of an offence under Clause (e) of Sub-section (2) of Section 45, the assessing authority may, after giving him a reasonable opportunity of being heard, by order in writing impose upon him by way of penalty a sum not exceeding one and a half times the tax payable on the turnover relating to the sale of such goods at a rate which is equal to the rate prescribed in the First Schedule less 2 per cent. Section 45(2)(e) provides that any person who after purchasing any goods in respect of which he has made a declaration under the proviso to Sub-section (3) of Section 3 fails without reasonable excuse to make use of the goods for the declared purpose shall, on conviction by a Presidency Magistrate or a Magistrate of the First Class, be liable to a fine which may extend to one thousand rupees and in the event of a second or subsequent conviction, to simple imprisonment which may extend to six months or a fine which may extend to two thousand rupees or both. Thus specific penalties for transgressing the declaration have been provided in the Act. It may be seen that the penalty takes into account the loss of revenue by reason of any such fraudulent act on the part of the purchaser by levying the higher tax prescribed in the First Schedule. The provisions of Sections 23 and 45(2)(e) stand in the same position as Section 10 of the Central Sales Tax Act and dealt with by the Supreme Court. In view of the similarity in the two sets of provisions, we consider that the law laid down by the Supreme Court would be applicable to the facts of the present case also. It may be that the Sales Tax Appellate Tribunal could itself have looked into the relevant declaration and satisfied itself about the liability of the assessee for the concessional claim made by him. However, the Tribunal has chosen to remand the matter to the Appellate Assistant Commissioner. We do not consider that the State can have any grievance when the matter is going to be looked into by the Appellate Assistant Commissioner. We, therefore, see no reason to interfere with the order of the Sales Tax Appellate Tribunal.
16. As regards the question as to whether the assessee is liable to be taxed on the scrap sales, the Tribunal itself has decided by applying the case in State of Tamil Nadu v. Burmah Shell Oil Storage and Distributing Co. of India Ltd,  31 S.T.C. 426 that the transactions are liable to be taxed. It is only in order to find out the nature and the details of the turnover, the matter has been remanded to the Appellate Assistant Commissioner. He has also to find out as to how far the law laid down by the Supreme Court would be applicable to the facts of this case. If the Supreme Court decision does not apply, the matter will have to be decided in the light of other provisions of the Act. In these circumstances, we do not consider that there is anything wrong in the order which requires interference at our hands. The revision petition is accordingly dismissed with costs of Rs. 250 (rupees two hundred and fifty).