AS per the provisions of erstwhile 65B(44) of the Finance Act, 1994, any activity by one person to another for a consideration was termed as service for the purpose of levy of service tax. It is known that under the erstwhile Finance Act, 1994 there was one remarkable section in the name of declared services notified as section 66E which had brought into the tax net the activity which could not be called as service under section 65B(44) of the same Act. Interestingly under this section 66E there was one entry (e) which stated - "agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act". Hence even if there was no activity by one person to another, if there was a consideration received, then the same was taxable. In effect Govt. wanted a share of money received by a person. Under the ambit of this clause the liquidated damages, notice pay and other events which was not an activity from one person to another would attract service tax. This entry in section 66E of Finance At 1994 was verbatim imported to CGST Act, 2017 in the form of the entry 5(e) of the schedule II to the CGST Act which read "agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act". This was necessary since the events resulting in the receipt of money without any activity by the supplier would not fall under sale, transfer, barter, exchange, licence, rental, lease, disposal as enumerated in section 7(1)(a) of the CGST act 2017. Further under the section 7(1) of the CGST act which enumerated what was supply the expression "supply" includes (d) viz. "the activities to be treated as supply of goods or supply of services as referred to in Schedule II". Hence, if any person receives money in the form of the liquidated damages, notice pay, for forbearance or for not doing any activity the same was made taxable in CGST Act, 2017 as in the Finance Act, 1994. This position was also upheld in a matter before the Maharashtra Appellate Authority for Advance Ruling in the case of Maharashtra State Power Generation Company Limited TOG-248-AAAR-GST-2018 &  TOG-35-ARA-GST-2018 wherein it was held that "Liquidated Damages for delay - Specific provision being made for levy of liquidated damages if project completion delayed beyond the scheduled date, appellant agrees to tolerate the delay done by contractor in return for payment of money - Value of work done remains unaltered and no price variation occurs because of liquidated damages - Therefore, liquidated damages falls under Clause 5(e) of Schedule-II of Central Goods and Services Tax Act, 2017 vide HSN Code 9997 attracting GST @ 18% (9% CGST + 9% SGST) under Notification No. 11/2017-C.T. (Rate)/State Tax (Rate) as amended". It was seen that the headnotes of schedule II stated "ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES". Hence it was opined that this Schedule II cannot specify what activity can be supplies since the same was only to state which activity was to be treated as supply of service or supply of goods in the event of overlapping or dispute between the taxpayer and the Govt. It was also made clear that the entries in the schedule II cannot define supply which was already defined under section 7(1)(a), (b) and (c) of the CGST Act 2017. The GST Council in its wisdom removed this section 7(1)(d) from the definition of supply in the GST (Amendment) Act, 2018 from 1st February 2019. Further, a new section was introduced viz. 7(1A) which stated "where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II". This makes it clear that what has been classified as "supply" under section 7(1) can be specified to be goods or services under this newly introduced section 7(1A). Hence the entries in the schedule II of the CGST Act cannot be termed as "supply" since the section 7(1)(d) was removed from the expression "supply". CBIC in its PPT released after the amendment also stated that "An activity must first be covered in definition of supply before being treated as goods or services as per Schedule II." This has resulted in a situation where there is no demand of CGST/SGST on the liquidated damages and the like, since it is not supply as per section 7(1)(a) of the CGST Act even if consideration was received. The immediate implication is that the ruling by the Maharashtra Appellate Authority for Advance Ruling in the case of Maharashtra State Power Generation Company Limited has been negated and rendered infructuous. The Maharashtra State Power Generation Company Limited can, therefore, claim refund of the CGST/SGST paid since the amendment of removing the section 7(1)(d) and inserting section 7(1A) has been done retrospectively from 1/7/2017.