Exempted services under Cenvat Credit Rules: prima facie taxable service activity led to waiver of pre-deposit and stay of recovery.

Exempted services under Rule 2(e) of the Cenvat Credit Rules, 2004 cover taxable services exempt from the whole of service tax and also services on which no service tax is leviable under Section 66 of the Finance Act, 1994. On a prima facie view, because the appellant was providing one taxable service, it was not rendering exempted services for the purpose of Rule 6(2) or Rule 6(3)(c). Pre-deposit of the service tax demand and penalty was therefore waived, and recovery of the disputed amounts was stayed pending appeal.

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Issues: Whether the appellant was providing exempted services so as to attract Rule 6(2) and Rule 6(3)(c) of the Cenvat Credit Rules, 2004, and whether pre-deposit of the service tax demand and penalty should be waived pending appeal.

Analysis: The order noted that exempted services under Rule 2(e) of the Cenvat Credit Rules, 2004 are taxable services exempt from the whole of the service tax leviable thereon and include services on which no service tax is leviable under Section 66 of the Finance Act, 1994. As the appellant was providing one taxable service, the order recorded a prima facie view that it was not rendering exempted services for the purpose of Rule 6(2) or Rule 6(3)(c).

Outcome: Pre-deposit was waived and recovery of the disputed amounts was stayed during pendency of the appeal.

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