TaxTMI 
TaxTMI 
Amount recovered from the customers in the financial year 19 - 20 towards non – issuance of Form – C (relating to VAT regime). Whether GST is required to be paid on it?
Recovery against non - issuance of Form - C
09 Aug 2023 
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Recovery for non-issuance of Form C treated as reimbursement, not GSTable unless separate consideration for toleration exists.
Recovery from a buyer of additional CST paid because Form C was not furnished is characterised as a reimbursement or pure agent collection rather than consideration for a supply, and therefore not subject to GST. Administrative guidance on "toleration of act" makes such amounts taxable only if there is an express contract and separate consideration to tolerate the buyer's default; mere compensation to discharge a statutory tax outgo does not create a taxable supply. (AI Summary)
Recovery from a buyer of additional CST paid because Form C was not furnished is characterised as a reimbursement or pure agent collection rather than consideration for a supply, and therefore not subject to GST. Administrative guidance on "toleration of act" makes such amounts taxable only if there is an express contract and separate consideration to tolerate the buyer's default; mere compensation to discharge a statutory tax outgo does not create a taxable supply. (AI Summary)