Statutory testing of energy meters is not taxable service when performed under a legal requirement without separate consideration.

Statutory testing and certification of energy meters carried out by the electricity board was not an independent commercial testing service because it was done to satisfy a statutory requirement for safe energy supply and no separate consideration was received. The Board's circular also stated that such statutory testing could not be treated as a taxable service. Service tax demand was therefore not sustainable, and the tax and penalty confirmation was set aside.

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Issues: Whether the statutory testing and certification of energy meters by the electricity board constituted a taxable service under the head of testing and certification.

Analysis: The activity was undertaken as part of a statutory requirement for safe supply of energy and not as an independent commercial service for consideration. The Board's circular clarified that testing activity carried out in terms of statutory requirement could not be treated as a taxable service. No separate consideration was received for the activity.

Conclusion: The demand of service tax was not sustainable and the confirmation of tax and penalty was set aside in favour of the assessee.

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