Why did the Holy Prophet Muhammad (saw) rebuke a companion who killed an enemy after his declaration of faith?

Because no one can look into another person's heart. Whoever says that he believes must be believed; judgement over what is inside him belongs to God alone. This account is no evidence that Islam was spread by the sword.

Some critics cite this account as proof that Islam was spread by the sword. They think an enemy in battle declared his faith only to save his life. But the account says something quite different. It shows that a declaration of faith must be taken seriously, even when one has doubts about it.

The companion believed the man had spoken only out of fear. That is possible. But no one can see into another person's heart. A person may lie, but he may also be telling the truth. Who is to judge? Only God. So a person's own word about his faith stands, and mere suspicion is not enough to deny it.

The verse above says the same. One must not tell someone who offers peace that he is not a believer. One has to investigate carefully and must not be led by the gains of this world.

Such cases in war were rare. When Islam prevailed in Arabia, no one was forced to accept it in order to save his life. The second verse above states clearly that there is no compulsion in religion.

So the account teaches restraint and respect for a person's conscience. It is the opposite of violence in the name of faith.