GST amount recovered from supplier

[Kaustubh Karandikar]

1) Amount of GST with interest and penalty on GST recovered from the supplier for loss of ITC towards not filing the Return GSTR – 1 by the supplier. Whether GST is required to be paid on such amount recovered from the supplier?

2) Amount recovered from the customer towards ‘C’ Form not issued. Whether GST is required to be paid on such recovery?

AI Summary

GST Applicability on Non-Compliance Recoveries Debated; Schedule-II (5)(e) and Circular 178/10/2022 Examined A discussion on a forum addresses whether GST is payable on amounts recovered from suppliers and customers due to non-compliance issues, such as not filing GSTR-1 returns or failing to issue 'C' Forms. One participant confirms that such recoveries fall under Schedule-II (5)(e) of the CGST Act, thus attracting GST. Another participant questions if these recoveries constitute 'consideration' under the CGST Act, suggesting that interest and penalties might be exempt. The conversation highlights differing interpretations, referencing Circular 178/10/2022, and advises careful examination of each case's specifics. Participants also discuss accounting implications, suggesting these recoveries be treated as expense deductions.