The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai Bench, has set aside a service tax demand against a small service provider, holding that once the aggregate value of taxable services falls below the prescribed threshold limit of Rs. 10 Lakhs, the benefit of exemption cannot be denied.

The bench of M.M. Parthiban (Technical Member)  examined the provisions of Notification No. 33/2012-ST, which grants exemption from service tax where the aggregate value of taxable services does not exceed ₹10 lakh in a financial year, subject to certain conditions. It noted that the appellant did not operate under any brand name and had not availed CENVAT credit, thereby satisfying the eligibility criteria for exemption. 

The case arose after the department compared the appellant’s Income Tax returns with service tax filings and alleged that taxable services had been provided without payment of service tax. A show cause notice was issued demanding ₹4.28 lakh along with interest and penalties. While the adjudicating authority partly reduced the demand to ₹1.63 lakh, it denied the benefit of small service provider exemption under Notification No. 33/2012-ST. The Commissioner (Appeals) upheld this decision, prompting the appeal before the Tribunal. 

Before the Tribunal, the appellant contended that he was an individual service provider engaged primarily in legal consultancy services and was eligible for the exemption available to small service providers. He also submitted that part of the income considered by the department was salary income and not taxable service receipts. 

The Tribunal rejected the department’s assumption that the appellant had already availed the exemption in an earlier year merely because he was registered under service tax. It held that such a presumption lacked evidentiary support and could not be the basis for denying the exemption. 

The Tribunal found that after excluding salary income, the aggregate value of taxable services stood at ₹7.68 lakh—well within the ₹10 lakh threshold. It therefore concluded that no service tax liability arose in the case. 

Setting aside the impugned order, the Tribunal held that the demand, interest, penalties, and late fee imposed on the appellant were not legally sustainable. Accordingly, the appeal was allowed in favour of the taxpayer. 

Case Details

Case Title: Parth Enterprises Versus Commissioner of CGST & C. Ex., Thane Rural 

Citation: JURISHOUR-1022-CES-2026(MUM) 

Case No.: Service Tax Appeal No. 85039 of 2024

Date:  29.04.2026

Counsel For  Appellant: Ashok Dattatray Patil

Counsel For Respondent: S.B.P. Sinha, Authorized Representative

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