Service tax effect while deductiong retention money

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22 June 2015 what will be service tax treatment while deducting retention money and cenvat credit rule.

CMA MALHAR BEHERA

CMA MALHAR BEHERA (Expert)
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22 June 2015 In cases where the receiver of service reduces the amount mentioned in the invoice/challan and makes discounted payment, then it should be taken as final payment towards the provision of service.
The mere fact that finally settled amount is less than the amount shown in the invoice does not alter the fact that service charges have been paid and thus the service receiver is entitled to take credit provided he has also paid the amount of service tax, (whether proportionately reduced or the original amount) to the service provider. The invoice would in fact stand amended to that extent. The credit taken would be equivalent to the amount that is paid as service tax.