re GST on amount recovery

[Madhavan iyengar]

A company has recovered Certain sums basic amount and interest from vendor these amounts are certain taxes of earlier law which was not paid by the vendor to the company and in companys assessment the ITC of earlier law was disallowed

query is gst applicable on the recovery of basic amount of taxes and the interest

AI Summary

Supply characterization: recovered taxes and interest may attract GST if treated as a supply of service, otherwise not.
Applicability of GST to recovery of earlier-law taxes and interest depends on whether the recovery constitutes a supply. One view treats recoveries as includible in value and as a supply of service under Schedule II Para 5(e), with discharge via DRC-03/DRC-07 and interest/penalty per Circulars 58/88. The opposing view holds there is no supply where the receipt is a monetary reimbursement of amounts disallowed earlier, so section 15 valuation and inclusion of interest do not apply.