2018 (1) TMI 645 - AT - Service Tax

Claim of small service provider exemption - Notification no. 6/2005-ST dated 01.03.2005 as amended by Notification no. 4/2007-ST dated 01.02.2007 - denial on the ground that the option to avail the exemption cannot be exercised in the middle of the Financial year, where the appellant had already opted for payment of service tax from beginning of the Financial year - Held that - The notification dated 01.02.2007 in clear and unambiguous terms provides that the provider of taxable service has the option not to avail the exemption and pay service tax on the taxable services provided by him and such option, once exercised in a financial year, shall not be withdrawn during the remaining part of such financial year - In this case, since the appellant had opted for payment of service tax at the beginning of the Financial year, as per the mandates of the said notification, it cannot change the option during the middle of the financial year, opting for the benefit provided under the said notification - appeal dismissed - decided against appellant.

Summary

Issues:
1. Denial of exemption claimed under Notification No. 4/2007-ST dated 01.02.2007.
2. Appellant's option to avail exemption in the middle of the financial year.
3. Interpretation of Notification no. 16/2005-ST dated 01.03.2005 as amended by Notification no. 4/2007-ST dated 01.02.2007.

Analysis:
The judgment by the Appellate Tribunal CESTAT New Delhi dealt with the denial of exemption claimed by the appellant under Notification No. 4/2007-ST dated 01.02.2007. The Commissioner, Customs and Central Excise (Appeals-I), Jaipur, had denied the exemption, citing that the option to avail the exemption cannot be exercised in the middle of the financial year if the appellant had already opted for payment of service tax from the beginning of the financial year. The appellant, a small-scale service provider, had initially opted to pay service tax on taxable services from April 2007 to June 2007. However, for the subsequent period from July 2007 to March 2008, the appellant chose to avail the exemption under the notification.

The Tribunal noted that Notification no. 4/2007-ST dated 01.02.2007 clearly states that once the provider of taxable service exercises the option to pay service tax at the beginning of the financial year, this choice cannot be changed during the remaining part of that financial year. As the appellant had already opted for payment of service tax at the start of the financial year, the Tribunal held that the appellant could not alter this choice in the middle of the financial year to avail the exemption under the notification.

Consequently, the Tribunal found no error in the impugned order and dismissed the appeal filed by the appellant. The judgment underscores the importance of adhering to the provisions and conditions specified in notifications related to service tax exemptions and the irrevocability of choices made by service providers during a financial year once an option is exercised.