Order Date: 13 July 2022

Facts-

• The Respondent, Madhya Pradesh Poorva Kshetra Vidyut Vitran Company Ltd is a wholly owned undertaking of the Government of Madhya Pradesh and is engaged in the distribution of electricity in the eastern area of the State. 
• The respondent charged late payment surcharge in the electricity consumption bills issued to the customers and recovered the same in case the customers made payment after the due date mentioned in the bill.
• This appellant, Commissioner, CGST aggrieved by the order dated January 13, 2020 passed by the Commissioner (Appeals) wherein demand of service tax was set aside and the appeal was allowed. 
• The period involved in this appeal is from April 2017 to June 2017 and the issue relates to payment of service tax on the amount collected by the respondent towards late payment surcharge, meter rent charge and supervision charges.

Issue-

• Whether Service tax is leviable on late payment surcharge, meter rent charge and supervision charges?

Order-

• The Tribunal observed from the decision of Torrent Power Limited – 2018 of Gujarat High Court it is clear that the activities that are related/ancillary to transmission and distribution of electricity would be exempt from payment of service tax since transmission and distribution of electricity is exempted. It is also clear from aforesaid decision that all services related to transmission and distribution of electricity are bundled services, as contemplated under section 66F(3) of the Finance Act, and are required to be treated as a provision of a single service of transmission and distribution of electricity, which service is exempted from payment of Service tax. This as what was held by the Tribunal in Madhya Pradesh Poorva Kshetra Vidyut Vitran.
• There it was held that no error in order passed by the Commissioner (Appeals) holding that service tax would not be leviable on late payment surcharge, meter rent charge and supervision charges. The appeal is, accordingly, dismissed.