CIR. NO. 134/03/2011- ST, DT. 08/04/2011
- Document type
- Circular
- Reference no.
- L
- Dated
- Category
- Service Tax Circulars-Year 2011
Education Cess and Secondary and Higher Education Cess reg.
Education Cess and Secondary and Higher Education Cess reg.
2. The issue has been examined. Though Tribunals Order referred above is in favor of revenue, it is inconsistent with the policy intention of the Government to exempt education cess in addition to service tax, where whole of service tax stands exempted. According to section 95(1) of Finance (No.2) Act, 2004 and section 140(1) of Finance Act, 2007, Education Cess and Secondary and Higher Education Cess are leviable and collected as service tax, and when whole of service tax is exempt, the same applies to education cess as well. Since Education Cess is levied and collected as percentage of service tax, when and wherever service tax is NIL by virtue of exemption, Education Cess would also be NIL.
3. This being the principle, field formations are directed not to initiate proceedings to recover the education cess, where whole of service tax stands exempted under the notification. Extending the same principle, where education cess has been refunded to exporters along with service tax, by virtue of exemption notifications where whole of service tax is exempt, the same need not be recovered.
4. Field formations may be instructed accordingly.
5. Please acknowledge the receipt of this circular. Hindi version to follow.
(J. M. Kennedy)
Director, TRU
Tel: 011-23092634