Small-scale service provider exemption cannot be claimed mid-year after choosing to pay service tax for the financial year.

A taxable service provider that elects to pay service tax at the start of a financial year cannot withdraw that choice mid-year to claim the small-scale service provider exemption. The notification permitted a provider to forgo the exemption and pay tax, but once that option was exercised for a financial year, it remained binding for the rest of that year. As the appellant paid service tax for the initial part of the year and later sought exemption for the same year, the mid-year switch was impermissible on the plain terms of the notification. The denial of exemption was upheld and the appeal failed.

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Issues: Whether the appellant, having opted to pay service tax at the beginning of the financial year, could switch mid-year to claim exemption under the small-scale service provider notification.

Analysis: The notification governing the exemption provided that a provider of taxable service could choose not to avail the exemption and pay service tax, but once that option was exercised in a financial year, it could not be withdrawn during the remaining part of that year. The appellant had paid service tax for the initial period of the financial year and then sought to claim the exemption for the later period in the same year. On the plain terms of the notification, such mid-year change of option was impermissible.

Conclusion: The appellant was not entitled to change the exemption option during the financial year, and the denial of exemption was . The appeal failed.

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