Issue of Credit Note on invoices raised for interest portion and gst discharged to the Government

[DNS]

One of our clients has raised an invoice for interest payable for the delayed payment in respect of the original supply.  As they have raised an invoice charging GST on the interest value.  Presently, the interest amount is not received from customers, and customers are not willing to pay the interest.  Whether the client can raise a credit note for cancelling invoices raised for the interest portion.  Whether a credit note can be raised for this type of transaction.  Is there any legal way to reduce the gst amount discharged to the Government for the reason that amounts were not received (in respect of interest portion) from customers?     

AI Summary

Interest invoicing and GST: credit notes may reverse GST on unpaid interest if statutory criteria and acceptance are met.
A credit note may be issued where the taxable value or tax charged in an earlier tax invoice exceeds the correct taxable value or tax payable, subject to the statutory temporal limits and the recipient's acceptance on their portal. GST on interest arises on receipt under the time of supply rules, so if interest is unpaid the supplier may issue a credit note limited to the GST attributable to that interest and should coordinate with customers to effect input tax reversals within prescribed timelines.