Hyderabad, Sept. 14 -- Delayed payment surcharges collected by power distribution utilities are penalties meant to discourage late payment, not payment for "tolerating" a delay, and cannot be taxed as a service, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad bench, has ruled while junking a Rs 50 crore service tax claim against the Northern Power Distribution Company of Telangana Limited (NPDCL).

Meter-testing charges fared no differently. According to The Times of India, the bench held that testing meters is so tied to the job of distributing electricity that it counts as part of that exempt service, not a separate taxable one.

Technical member AK Jyotishi and judicial member Angad Prasad delivered the rulin...