Interesting query

As you said, the turnover shall exceed the threshold limit in another 2-3 years, therefore there is no point in surrendering the Certificate of Registration as the same will be required after 2-3 years. 

He shall have to file NIL Serivce Tax Return, even if he is not collecting service tax on the invoice raised by him.

He shall collect service tax from clients only at the time his tiurnover exceeds the threshold limit (ie. Rs. 10 Lacs.)

Regards,

Devendra Kulkarni 

What would be the consequences of not filing the return ?As the service taxpayable him is nill

Refer the link below for the consequence for non-filing of service tax return within the due date.

https://www.simpletaxindia.net/2011/03/penalty-for-late-filing-of-service-tax.html

Regards,

Devendra Kulkarni

Thanks Devendra,

So would be better to surrender the Certificate as it would take 3 to 4 yrs to achieve the Turnover.

I would not advise you to surrender the Service Tax Registration Certificate. Instead go on filing Nil Returns till the Turnover exceeds the threshold limit not chargeable to Service Tax.

In case he defaluts in filing the Nil Returns, penalty shall be levied on him.

There is no need to refer to any case law for each and every petty things. 

Further he shall be under no obligation to collect Service Tax from Clients unless his Turnover from services exceeds the Threshold Limit not chargeable to Service Tax. (Presently, Rs.10 Lakhs).

Advice : File NIL Returns and do not surrender the Registration Certificate.