Education cess waiver for exporters granted where full service tax exemption applied under refund notification and circular guidance.

Exporters seeking refund of service tax on input services under Notification No. 41/2007 were found entitled to complete waiver of pre-deposit and stay of recovery of education cess. The Board circular clarified that where the whole service tax is exempt, education cess is nil, and on the facts placed before it the Bench held that a full waiver was justified during pendency of the appeal.

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Issues: Whether the appellants were entitled to complete waiver of pre-deposit and stay of recovery of the education cess demanded under the impugned order.

Analysis: The appellants were exporters claiming refund of service tax paid on input services under Notification No. 41/2007. The Board's Circular No. 134/3/2011-S.T., dated 8-4-2011, clarified that where the whole service tax is exempt, education cess would be nil. On the facts placed before it, the Bench found that a case for full waiver was made out.

Conclusion: The appellants were entitled to 100% waiver of pre-deposit and stay of recovery of the education cess during pendency of the appeal.

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