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TMI Blog2022 (4) TMI 773X X X X Extracts X X X X X X X X Extracts X X X X ..... tes in these cases are also identical. Except one issue, all issues in dispute in these appeals were earlier decided in Service Tax Appeal No. 51649 of 2019 in respect of Madhya Pradesh Poorva Kshetra Vidyut Vitran Co. Ltd. by a bench of this Tribunal by final order No. 51031 of 2021 dated 14 January, 2021 following the judgment of Gujarat High Court in the case of Torrent Power Ltd. versus Union of India [Special Civil Application No. 5443/2018] decided on December 19, 2018. 3. Aggrieved by the final order dated 14 January 2021 of this Bench, Revenue has filed Civil appeal No. 5973/2021 before the Hon‟ble Supreme Court, which was registered on 24 September 2021 and is still pending. Nevertheless, as the issues have already been decided by the Hon‟ble Gujarat High Court which decision was followed in respect of the same appellant by this Bench, we find no reason to take a different view in the matter. The issues which for consideration are the exigibility to service tax on the following and consequent imposition of penalties upon the appellants for non-payment of Service Tax in respect of the following :- (i) Late payment surcharge: The amount is charged by the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Service Tax, Raipur [Service Tax Appeal No. 50567 of 2019 decided by 51651/2020 dated 22 December 2020] in which it was held as follows: 22. In this connection it would also be pertinent to refer to TRU Circular dated 20 June, 2012 issued by the Central Board of Excise and Customs as an Education Guide when the Negative List based taxation regime was introduced from July 2012 to clarify various aspects of the levy of service tax. The Board dealt with "consideration" in paragraph 2.2 of this Circular and pointed out that since the definition was inclusive, it will not be out of place to refer to the definition of "consideration" as given in section 2(d) of the Indian Contract Act, 187212. The relevant portion of the aforesaid Circular is reproduced below: "2.2 Consideration 2.2.1 The phrase "consideration" has not been defined in the Act. What is, therefore, the meaning of "consideration"? As per Explanation (a) to section 67 of the Act "consideration includes any amount that is payable for the taxable services provided or to be provided. Since this definition is inclusive it will not be out of place to refer to the definition of "consideration" as given in sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld specify the: (i) consideration for agreeing to the obligation to refrain from an act; or (ii) consideration for agreeing to tolerate an act or a situation; or (iii) consideration to do an act. 26. Thus, a service conceived in an agreement where one person, for a consideration, agrees to an obligation to refrain from an act, would be a 'declared service' under section 66E(e) read with section 65B (44) and would be taxable under section 68 at the rate specified in section 66B. Likewise, there can be services conceived in agreements in relation to the other two activities referred to in section 66E(e). 27. It is trite that an agreement has to be read as a whole so as to gather the intention of the parties. The intention of the appellant and the parties was for supply of coal; for supply of goods; and for availing various types of services. The consideration contemplated under the agreements was for such supply of coal, materials or for availing various types of services. The intention of the parties certainly was not for flouting the terms of the agreement so that the penal clauses get attracted. The penal clauses are in the nature of providing a safeguard to the commerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The relevant portion of the judgment is reproduced below: "Under the main agreement, a party had contracted for the conversion of whole arhar grain into dal. Subsequently, by another supplemental agreement, the party agreed to upgrade the dal. It was held that as soon as the first agreement was complied with and dal was delivered, the contract came to an end and the supplemental agreement, which was made subsequently, was a separate and independent agreement. In this agreement, there was no consideration to be given to the promissor and thus that agreement could not be enforced in law. It was claimed that in the supplemental agreement consideration was that the bank guarantees were not to be encashed, but it was found that there was no mention of such a consideration in the supplemental agreement. Although if a party promised to abstain from doing something, it could be regarded as consideration for the contract, but in the present case there was no such case of abstinence and there was no consideration for supplemental contract." (emphasis supplied) 32. In the present case, the agreements do not specify what precise obligation has been cast upon the appellant to refrain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find no reason take a different view in this case. 7. The details of the demands and penalties imposed in these appeals are as follows :- Sl.No Appeal No. Issue Involved Duty Involved Penalty Imposed 1 ST/50289/2019 * Late Payment Surcharge * Meter Renting Charges * Supervision Charges * Work Contract Service * Non-payment of Service Tax on l ease rent. Rs. 93,47,59,963/-(in respect of 6 SCN by common order) 1) Rs. 93,47,59,963 /- under Section78 2) Rs. 60,000/-under Section70 (1) 3) Rs. 60,000/-under Section 77(2) 2 ST/50168/2019 * Late Payment Surcharge Rs. 183,88,53,751 /- 1) Rs. 183,88,53,751 /- under Section78 2) Rs. 10,000/-under Section 77 (1) (a) 3) Rs. 10,000/-under Section77(1)(d) 4) Rs. 10,000/-under Section77(2). 3 ST/51066/2019 * Liquidated Damages Charges Rs. 4,11,98,996 /- Rs. 4,11,98,996 /- under Section78 4 ST/50513/2019 * Late payment Surcharge * Meter Renting Charges Rs. 107,81,05,451 /- under Section 78 R/w 173,174 of CGST Act, 2017 5 ST/52104/2019 * Meter Rent * Reconnection * Income fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of service tax leviable thereon under section 66 of the Finance Act. Thus, what was exempt under those provisions was transmission and distribution of electricity, despite which, during the pre-negative list regime, the respondents have considered services related to transmission and distribution of electricity as exempted from service tax by virtue of those notifications. Insofar as electricity meters are concerned, vide circular No.131/13/2010-ST dated 7.12.2010, it was clarified that supply of electricity meters for hire to consumers being an essential activity, having direct and close nexus with transmission and distribution of electricity, the same is covered by the exemption for transmission and distribution of electricity extended under relevant notifications. 13. Thus, the reason for saying that supply of electricity meters for hire to consumers is covered by the exemption notification is that such service is an essential activity having direct and close nexus with transmission and distribution of electricity. This circular only provides an interpretation of when a service would stand included in another service, namely, when such service is an essential activity having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e such services without pointing out any specific change in the nature of the exemptions, except that they are provided under different statutory provisions. In the opinion of this court, the meaning of "transmission and distribution of electricity" does not change either for the negative list regime or the GST regime. If that be so, the services which stood included within the ambit of transmission and distribution of electricity during the pre-negative list regime cannot now be sought be excluded by merely issuing a clarificatory circular, that too, with retrospective effect. By the clarificatory circular, the respondents seek to give a different interpretation of the very same services as against the clarification issued for the prenegative list regime. 15. Thus, from the very manner in which the respondents have treated the services related to transmission and distribution of electricity during the pre-negative list regime, such services would stand covered by the exemption granted to transmission and distribution of electricity by virtue of inclusion of such services in the list of negative services under section 66D (k) of the Finance Act as well as by virtue of exemption n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(22) of the Electricity Act. Sub-section (2) of section 43 of the Electricity Act casts a duty upon the licensee to provide if required electric plant or electric line for giving electric supply to the premises. Therefore, providing electric line and electric plant are elements of service which are naturally bundled in the ordinary course of business, with the single service of transmission and distribution of electricity which gives the bundle its essential character. The only related service which does not fall within the ambit of the definitions of electric line and electric plant is the meter used for ascertaining the quantity of electricity supplied to any premises. However, insofar as installation of electricity meter and hire charges collected in respect of electricity meters are concerned, by the circular dated 7th December, 2010, the Government of India has clarified that supply of electricity meters for hire to the consumers is an essential activity having direct and close nexus with transmission and distribution of electricity and therefore, is covered by the exemption for transmission and distribution of electricity extended under the relevant notifications. Evidently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingle service of transmission and distribution of electricity, which service is exempted from payment of service tax. 29. Thus, for all the reasons stated above, it is not possible to sustain the levy of service tax on the amount collected by the appellant for late payment surcharge, meter rent and supervision charges. 30. The issue that now remains to be decided is about the levy of penalty on the lease rent collected from the customers. The appellant claims that since it has deposited the lease rent, the levy of penalty may be set aside. It is not possible to accept this contention of the learned counsel for the appellant. The imposition of penalty under 'lease rent‟ is, therefore, confirmed. 31. Thus, for all the reasons stated above, the confirmation of demand by the Principal Commissioner on late payment surcharge, meter rent and supervision charges are set aside. The levy of penalty on the lease rent amount is confirmed. The appeal is, therefore, allowed to the extent indicated above". 9. In view of the above, the appeals are disposed of, as below: (i) In Service Tax Appeal no. 50289 of 2019, the demand of service tax on late payment surcharge meter renting cha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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