S.T.Credit availability in case of partly exempted services

This query is : Resolved

Navneet Khetan (Querist)
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14 June 2009 Can Service Tax Credit can be availed fully if a service provider is providing a service with 90% abatement?
For instance: A service provider provides a service for Rs.10,000/- and after deducting 90% abatement, he has to pay service tax on Rs.1,000/-, i.e. 10.3% of Rs.1,000/- = Rs.103/- will be the service tax payable. Now he has taken Cenvat credit of Rs.100/- on input services received directly. Can he can utilize the full cedit of Rs.100/- towards payment of service tax of Rs.103/-?, if yes will he has to pay just Rs.3/- (Rs.103/- - Rs.100/-)?

SIDDHARTHA SANKAR ROY

SIDDHARTHA SANKAR ROY (Expert)
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14 June 2009 One of the preconditions for availing abatement is that cenvat credit on input services cannot be taken. So, I think credit of Rs 100/- has been wrongly taken.