Exemption option under service tax notification cannot be withdrawn after election to pay tax during the financial year.

An exemption notification for small-value service providers was treated as optional, allowing the assessee either to avail the exemption or to pay service tax. Once the assessee chose to pay tax during the financial year, that election could not be withdrawn for the rest of the year under clause 2(i). A later claim that the payment was made on wrong advice did not change the legal effect of the exercised option. The exemption was therefore unavailable, and the demand, interest, and penalty were sustained.

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Issues: Whether the assessee, having registered and paid service tax during the financial year, could later claim the benefit of the exemption notification available to service providers whose aggregate value of taxable services did not exceed the prescribed limit.

Analysis: The exemption under the notification was optional. Clause 2(i) allowed the provider of taxable service either not to avail the exemption and to pay service tax, and provided that once such option was exercised in a financial year, it could not be withdrawn during the remaining part of that financial year. The assessee's plea of having acted on wrong advice did not alter the factual position that the option to pay tax had already been exercised.

Conclusion: The denial of the exemption was justified and the assessee was not entitled to resile from the option already exercised in the financial year.

Final Conclusion: The appeal failed and the demand, interest, and penalty were sustained.

Ratio Decidendi: Where an exemption notification grants an assessee an option either to avail the exemption or to pay tax, the option once exercised in a financial year cannot be withdrawn for the remainder of that year.

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