Small service provider

This query is : Resolved

Pramod Icwai (Querist)
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26 February 2012 CASE IN POINT

1. A Service Provider (Management Consultant) obtained Service Tax Registration in FY 2000-01.
2. He paid commensurate service tax for first 6 Financial Years.
3. He had NIL Professional Receipts in Year 2006-07, Year 2007-08.
4. From Year 2008-09 onward (for 4 consecutive Financial years now) he been receiving Rs. 3-5L per year as Professional Fees.

QUESTION being whether the Assessee is required to pay Service Tax every year just because he holds Service Tax Registration, or does he qualify the exemption granted to SMALL SERVICE PROVIDERS (Receipts less than Rs. 8 /10 Lacs per year) on year to year basis?

It is our understanding that the SMALL SERVICE PROVIDER whose aggregate value of taxable services in the previous year has not exceeded a limit of Rs. 10L (Notification No. 08/2008-ST dated 1.03.2008) is exempt from payment of Service Tax. We also understand that the provider of taxable service has the option not to avail the exemption contained in the said notification 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service tax on the taxable services provided by him and such option, once exercised in a financial year, shall not be withdrawn during the remaining part of such financial year.

The above two provisions in the said notification when read together imply that the SMALL SERVICE PROVIDER (so defined) also has the option to AVAIL the said EXEMPTION irrespective of the fact whether he had a Service Tax Registration or not.

Soliciting an expert opinion on this case.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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26 February 2012 Your understanding is correct. However, the SSP has to file 1/2 yearly returns also for the years 2006-07 and onwards failing which proceedings for late filing fee as per rule 7C of the service tax rules,1994 can be initiated though there is a waiver in 'no liability' cases.

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