Service tax calculation

If there is an agreement for provision of service and the service provider, after provision of service sends a bill for, say, Rs.1 lakh+ST on Rs.1 lakh. while processing the bill, they identified some lacuna in the service provided and hence as per the penalty clause of the agreement levied the penalty of, say, Rs.10000. accordingly, only 90000+ST is to be paid to the service provider. As per the accounting of the service receiver, the gross amount (Rs.1 lakh) is shown as an expense and the penalty deducted (Rs.90000) is shown as miscellaneous income. Now the service tax is to be calculated on Rs.1 lakh or on 90000?