Hyderabad: The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad, has upheld relief granted to the Northern Power Distribution Company of Telangana (NPDCL), holding that delayed payment surcharges and meter-testing charges collected from consumers are not liable to service tax.
It therefore shared the same exempt status as electricity distribution. It further argued that meter testing, for which a separate fee was collected, constituted an independent taxable service and was not covered by the exemption available for the transmission or distribution of electricity. NPDCL argued that both the delayed payment surcharge and meter-testing charges were levied under tariffs and regulations prescribed by the Telangana State Electricity Regulatory Commission and were not negotiable charges. The tribunal also held that meter testing was intrinsically linked to electricity distribution and was naturally bundled with the principal service.
Since no service tax was payable, the tribunal also found no basis for levying interest or penalties.
CESTAT further rejected the invocation of the extended limitation period, noting that the department was already aware of the relevant facts through an earlier investigation and show-cause notice.