Is it justified to collect service tax on penalty charged?

Telecom companies and Banks are charging service tax on late payment charges, Penalties, Penal interests, etc. If you credit card bill has a  late payment charge of Rs.1000 on which Rs.140 will be charged as service tax. 

Service tax is to be charged on the gross amount paid by the customer for performing an activity; after deducting non-taxable amounts.

Non-taxable amounts being:

Exemption provided for in the mega exemption notification, 
Amounts charged for goods,
Amounts charged as penalty (Interest or fixed amount), etc

The changeability of service tax occurs when an "activity" is being performed. In cases of penal charges, no activity is performed. Hence, there is no question of service tax being charged in this regard. Interest on delayed payment has also been kept out of the purview of service tax. Hence, service tax on late payment charges is not applicable as per the basic definition of service! 

CBEC had issued two circulars clarifying the matter in this regard: 

(i) Circular No. 96/7/2007 - ST dated 23.08.2007 which clarifies that an amount collected for delayed payment of a telephone bill is not to be treated as consideration charged for provision of telecom service and therefore, does not form a part of the value of taxable service.

(ii) Circular No. 121/02/2010 - ST dated 26.4.2010 which clarifies that detention charges in respect of detained containers are not in respect of service provided on behalf of client (under BAS) nor is it on account of infrastructure support services (under BSS). Such charges can at best be called as 'penal rent' for retaining the containers beyond the predetermined period. Therefore, the amount collected as 'detention charges' is not chargeable to service tax.

Applying the same analogy, CBEC has clarified that delayed payment charges received by the stock brokers are also therefore, not includible in taxable value as the same are not the charges for providing taxable services. Such charges are on account of delay in making payments by the service recipient to the service provider and are in the nature of a penal charge for not making the payment within stipulated time. It may be noted that the Board has stated that this principle will also apply to other
service providers. 

Further it is to be noted that, it is compulsory for the service provider to charge tax on the entire gross amount when these details are NOT mentioned in the bills.  Further, this provision of taxing on the gross amount is applicable only when the taxable and non-taxable amounts are NOT ASCERTAINABLE. IF the receiver is able to ascertain the bifurcation, he MUST issue either a separate bill or mention the non-taxable amount.  

(Communication with the service providers has been initiated to resolve this issue, what is your take?)