Late registration of service tax code

DEAR ALL

1 OF MY CLIENT STARTED HIS BUSINESS IN 1998. HOWEVER, HIS GROSS RECEIPTS WERE LOWER THAN THE SSI EXEMPTION LIMIT FROM TIME TO TIME FOR ALL THESE YEARS. CLIENT DID NOT APPLY FOR SERVICE TAX REGISTRATION.

NOW THE CLIENT APPLIED FOR THE REGISTRATION & GOT THE SAME. THE DEPARTMENT ASKING THE DATE OF COMMENCEMENT OF BUSINESS.

IT SAYS "THE BUSINESS BE REGISTERED WITHIN 30 DAYS FROM THE DATE OF COMMENCEMENT OF SERVICE PROVIDING ACTIVITY OR WITHHIN 30 DAYS OF WHICH LIABILITY TO REGISTER ARISES.

THEY MAY LEVY PENALTY OF Rs. 5000/- FOR LATE REGISTRATION. CAN WE TAKE STAND OF "GROSS RECEIPTS BEING BELOW SSI LIMIT & HENCE NO LIABILITY TO REGISTER" AND SAVE OURSELVES FROM PENALTY PROVISIONS?

PLZ ADVISE