Service Tax returns

Dear Sir/s,

I am registered to Service Tax (since Sept.09 2004) in Bangalore, Karnataka.

All my paperwork were handled by a CA, whom, I used to visit every month to fill up my TR-6 challan etc. and he would then have the documents remitted at the

respective departments/offices

The CA being very busy and handling all his clients alone with only a single assistant, was unable to keep pace. Early 2006, I felt he reduced paying attention to

my work and would give me excuses, that he was travelling and so on.

Upon realising that the paperwork was piling up, I took over from him, collected all my documents and met another CA who advised me it was not necessary to

collect ST henceforth, as my turnover in terms of services rendered (read billed), did not exceed Rs. 10 lakhs.

What both the CA's evidently did'nt inform me, was that, ST returns had to be filed religiously every half yearly.

A month ago, I received a letter from the ST dept. notifying me as to why I had stopped filing my returns and asking me to take necessary steps.

Upon discussing with the current CA, he mentioned that ST returns had to be filed religiously, failing which a penalty (approx. Rs. 4000/- per every return not

filed) would be applicable and there was no alternative to this.

However, upon searching the net for ST-Rules, I noticed that the penalty can be reduced or waived off altogether as given under Rule 7(C) (document attached)

[ Provided also that where the gross amount of service tax payable is nil, the Central Excise officer may, on being satisfied that there is sufficient reason for
not filing the return, reduce or waive the penalty.]21

I am at cross roads as to what should be my next step.
I strongly feel, I should meet the concerned officer at the ST department and seek for a reduction in Penalty.

Your immediate reponse would be of immense help.

Thank you
Regards