Availability of exemption limit

[BAL KRISHAN GARG]

My Dear All Friends , A is having Service Tax Reg.No. since last 2 years and his Gross Receipts from taxable services was Rs.450000 during 2006-07 and Rs.350000 in 2007 -08 and Rs.460000 in 2008 -09 .Whether he can be liable for 2007 -08 and 2008- 09 although the exemption limit was Rs.8 Lacs and Rs.10 Lacs in 2007 -08 and Rs.10 Lacs in 2008-09 .He had filed nil returns during these two year . My basic Question is that when someone is registered with the Service Tax and deposited the tax as per law but in the next year his receipts falls below the exemption limit whether he can be held liable for payment of service tax ? What the law say regarding this ? I will be highly oblidged if someone can clarify this fact . Thanks a lot (BAL KRISHAN GARG )

[rishi mohan]

As per Service Tax Rules if the turnover in the previous financial year does not exceeds the exemption limit of Rs. 10 lacs then the assessee is not liable to charge service tax in the current financial year inspite of registration under service tax. But Nil return of service tax shall be produced on half yearly basis.

[YP SOOD]

A person below taxable limit is not reqd. 'to pay' (rules say pay )the ST. but if u have recovered the tax inspite of exemption ,tax has to be deposited. mr garg u can surrender ur regn. certificate,by seeing current year's situation.if u so wish.

AI Summary

Service tax exemption threshold: registered taxpayers below the limit need not pay tax but must file nil returns. If the previous financial year's turnover does not exceed the statutory exemption limit, the person need not charge or remit service tax in the current year despite registration. However, any tax recovered despite the exemption must be deposited, registered persons must file prescribed nil returns periodically, and may opt to surrender their registration certificate if ongoing turnover remains below the exemption.