Small scale exemption and service tax registration requirements: fresh declaration not essential, but threshold breach upheld tax and penalties.

Denial of small scale exemption solely for non-filing of a fresh declaration was not justified where the assessee had already availed the exemption in the preceding year, so that benefit could not be refused on that ground alone. Once taxable turnover crossed the prescribed limit, registration became mandatory and service tax had to be paid before departmental investigation began, and failure to comply supported penal consequences under the service tax provisions. The reduced service tax demand and penalties were therefore upheld.

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Issues: Whether denial of small scale exemption on the ground of non-filing of declaration was justified, and whether service tax demand with penalties could be sustained for failure to obtain registration and pay tax after crossing the turnover threshold.

Analysis: The appellants had availed the exemption in the preceding year, so denial of the benefit in the next year merely for want of a fresh declaration was not . At the same time, once the taxable turnover crossed the prescribed limit, registration was required and service tax ought to have been paid before the departmental investigation commenced. The failure to comply with these statutory requirements justified penal consequences under the service tax provisions.

Conclusion: Denial of the exemption solely on the ground of non-filing of declaration was not sustained, but the reduced service tax demand and the penalties were upheld against the assessee.

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