Service tax_ small service providers exemption

Dear Professionals,

I am really not able to comprehend this condition relating Small Service Providers Exemption ( notification 6/2005 ST dated 01.03.2005)

the provider of taxable service who starts availing exemption under this notification shall be required to pay an amount equivalent to the CENVAT credit taken by him, if any, in respect of such inputs lying in stock or in process on the date on which the provider of taxable service starts availing exemption under this notification;

 

Can anyone pls explain this condition with a practical illustration

 

Thanks in advance

 

Do we really need to pay the Cenvat amount or just reverse the entry???

Replies (1)

"the balance of CENVAT credit lying unutilised in the account of the taxable service provider after deducting the amount referred to in sub-paragraph (v), if any, shall not be utilised in terms of provision under sub-rule (4) of rule 3 of the said rules and shall lapse on the day such service provider starts availing the exemption under this notification;""

 

Then what is the significance of this condition

 

pls sm1 help me

 

thnks once again

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