K.S. Radhakrishnan, J.

These revision petitions arise out of the common order passed by the Kerala Agricultural Income Tax and Sales Tax Appellate Tribunal, Addl. Bench, Kottayam in TA.261, 520 and 625 of 2003. Common issues arise for consideration in all these cases. Hence we are disposing of these cases by a common judgment. For convenient sake we may refer to the facts in STR.291 of 2005.

2. Petitioner is a private limited company engaged in the manufacture of combustible paper cartridge cases for use of the defence force. On 15-4-1999 the petitioner company entered into an agreement with another company by name Mas Combustible Pack Ltd. (MCP), Cherthala with its factory at Hyderabad for providing technology for production of combustible cartridge cases (CCC) and to help continuously by undertaking the repairs and maintenance required for machinery of the said company. Petitioner company has also agreed to depute suitable personnel to MCK factory at Hyderabad for supervising uninterrupted production of CCC. Petitioner company is entitled for 5% of the sales turnover of CCC towards remuneration for the services rendered. An agreement to that effect was executed on 15-4-1999 between the petitioner company and Mas Combustible Pack Ltd. Pursuant to the agreement petitioner company had deputed its personnel’s to the Hyderabad factory of Mas Combustible Pack Ltd. for providing technical know-how and also for maintenance and repairs of the machinery of that company and in consideration the petitioner company has received a sum of Rs.1,24,19,567/- for the assessment year 1999 – 2000 as royalty.

3. Sales Tax Officer, Cherthala, the assessing authority, verified the books of account of the petitioner for year 1999-2000 for completing the assessment. On verification of the accounts it was found that the petitioner had received a sum of Rs.1,24,19,567/- towards royalty for assessment year 1999-2000 and hence a notice under section 17 (3) of the KGST Act, 1963 was issued to the petitioner proposing to levy tax on the said amount at the rate of 10% treating the income from royalty as turnover taxable under the Act. It was also proposed to make an addition of Rs.1 lakh to the conceded turnover for non-maintenance of manufacturing account and corresponding addition of RS.70,000/- towards turnover under section 5A of the KGST Act, 1963.

4. Petitioner on receipt of the said notice filed objection stating that royalty received is in respect of technical knowhow provided to Mas Combustible Pack Ltd. Cherthala for manufacture of combustible cartridge cases and technical know-how being not “goods” the amount received on that account cannot be subjected to tax under the KGST Act. With regard to the non-maintenance of manufacturing account it was submitted that the petitioner was not manufacturing any consumable article and it was manufacturing only combustible cartridge cases for Defence Services of India according to orders. Further it was also stated that combustible cartridge cases are part of ammunitions for use during war times and it was not salable in the open market. Assessing authority rejected both the contentions and completed the assessment for the year 1999-2000 as proposed in the pre-assessment notice levying tax on the royalty income received and also sustaining the addition of Rs.1 lakh to the conceded turnover. Original assessment order is dated 26-8-2002.

5. Petitioner aggrieved by the order filed appeal before the Appellate Assistant Commissioner, Commercial Taxes, Alappuzha. First Appellate Authority however, deleted the addition of Rs.1 lakh and corresponding addition of Rs.70,000/- under section 5A of the Act placing reliance on the decision of this court in (2002) 128 STC 39. Levy of tax on royalty received was however sustained and held that the amount received for providing technology was liable to tax. Aggrieved by the order of the Appellate Authority dated 17-5-2003 petitioner took up the matter in appeal before