Irrevocable exemption election under service tax notification defeats refund claim when taxpayer later tries to withdraw mid-year.

A taxable service provider who opts, under an exemption notification, not to avail the exemption and instead pays service tax cannot withdraw that election during the remaining part of the same financial year. The appellant had paid service tax for the first half of the year and then sought to surrender registration in the second half, which was contrary to the notification's express condition. Because the election once exercised was irrevocable for that financial year and the condition was not satisfied, the claim for exemption and consequential refund failed. The rejection of the refund claim was therefore upheld.

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Issues: Whether the appellant was entitled to refund of service tax paid for the first half of the financial year despite having exercised the option to pay tax under the exemption notification.

Analysis: The exemption notification permitted a taxable service provider to opt not to avail the exemption and pay service tax, but once that option was exercised in a financial year it could not be withdrawn during the remaining part of that year.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 paid service tax for the first half of the year and sought to surrender registration in the second half, which was contrary to the express condition of the notification. Since the condition was not complied with, the claim to exemption and consequential refund could not be sustained.

Conclusion: The refund claim was not allowable and the rejection of refund was upheld against the assessee.

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