Tribunal rules in favor of appellants on service tax demands, upholding some while setting aside others.

The Tribunal ruled in favor of the appellants in setting aside the demands for service tax on late payment surcharge, meter renting charges, and supervision charges. The demands for service tax on lease rental and works contract service were upheld as the appellants did not dispute these and had already deposited the amounts. The demand for service tax on liquidated damages was also set aside as they are not considered a taxable service. Various appeals were allowed or dismissed accordingly, with the order pronounced on 12/04/2022.

---

---

Issues Involved:
1. Late payment surcharge
2. Meter renting charges
3. Supervision charges (re-connection and dis-connection charges)
4. Lease rental
5. Works contract service
6. Liquidated damages

Issue-wise Detailed Analysis:

1. Late Payment Surcharge:
The appellants charged late payment surcharges in the electricity bills issued to customers. The demand was based on the argument that this surcharge constituted a declared service under Section 66E(e) of the Finance Act, 1994, as it involved tolerating the non-payment of electricity bills within the stipulated time. The Tribunal, referencing its final order dated 14 January 2021, dropped the demand for the prior period, asserting that such charges are not subject to service tax.

2. Meter Renting Charges:
The appellants collected meter rents from consumers. The Revenue argued that meter renting charges are not covered under the negative list of services exempt from service tax. However, the Tribunal, in its final order dated 14 January 2021, dropped this demand for the earlier period, ruling that meter renting charges are not subject to service tax.

3. Supervision Charges (Re-connection and Dis-connection Charges):
The Revenue contended that supervision charges for re-connection and dis-connection are not related to the transmission and distribution of electricity and thus not covered under the negative list of services. The Tribunal, in its final order dated 14 January 2021, dropped the demand for these charges, concluding they are not subject to service tax.

4. Lease Rental:
The appellants received lease rental from pole users for cable TV networks. The appellants did not dispute the service tax liability on this rental and had already deposited the same. The Tribunal upheld the demand and the penalties associated with this income.

5. Works Contract Service:
The appellants did not dispute the service tax liability under this head and had deposited the same. The Tribunal upheld the demand and the associated penalties.

6. Liquidated Damages:
The appellants collected liquidated damages from contractors who failed to meet their contractual obligations. The issue was whether service tax could be levied on these liquidated damages. The Tribunal, referencing several decisions including M/s. Southeastern Coal Fields versus Commissioner of Central Excise and Service Tax, Raipur, concluded that liquidated damages are not a consideration for a taxable service but a compensation for non-performance of a contract. Therefore, no service tax can be levied on liquidated damages.

Judgment Summary:
The Tribunal followed its previous order dated 14 January 2021 and the Gujarat High Court's judgment in Torrent Power Ltd. versus Union of India. It ruled that:

- The demands for service tax on late payment surcharge, meter renting charges, and supervision charges are set aside.
- The demands for service tax on lease rental and works contract service are upheld as the appellants did not dispute these and had already deposited the amounts.
- The demand for service tax on liquidated damages is set aside, as they are not considered a taxable service under Section 66E(e) of the Finance Act, 1994.

Appeal-wise Orders:
1. ST/50289/2019: Demand for late payment surcharge, meter renting charges, and supervision charges set aside. Demand for works contract service and lease rent upheld; associated penalties upheld.
2. ST/50168/2019: Appeal allowed; impugned order set aside.
3. ST/51066/2019: Appeal allowed; impugned order set aside.
4. ST/50513/2019: Appeal allowed; impugned order set aside.
5. ST/52104/2019: Demand for meter rent and re-connection/dis-connection charges set aside. Demand for rental from poles used by cable TV network upheld; associated penalties upheld.

Conclusion:
The appeals were disposed of with consequential relief, if any, to the appellants. The order was pronounced in open court on 12/04/2022.

---