A systematic study of fabrication and effect of post-deposition processing on the optical and structural features of silicon-rich hydrogenated amorphous silicon nitride thin films deposited by Hg-sensitized Photo-Chemical Vapour Deposition technique is presented. Both deposition parameters and post-deposition thermal treatment resulted into substantial change in the refractive index associated with the densification of the film. Our studies reveal that the presence of hydrogen and its out-diffusion upon thermal treatment play a crucial role in the overall structural evolution, specially the stabilization of individual phases such as Si and Si3N4. We further report the room-temperature photoluminescence from as-deposited films, which is due to formation of silicon nanostructures in crystalline and amorphous forms. These studies are of great interest from the prospective of commercially viable Si-based technology.