Sec 93- Special provisions regarding liability to pay tax, interest or penalty in certain cases

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Sec 93- Special provisions regarding liability to pay tax, interest or penalty in certain cases 2017-04-14T01:45:17+00:00

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    (1) Save as otherwise provided in the Insolvency and Bankruptcy Code, 2016, where a person, liable to pay tax, interest or penalty under this Act, dies, then–
    (a) if a business carried on by the person is continued after his death by his legal representative or any other person, such legal representative or other person, shall be liable to pay tax, interest or penalty due from such person under this Act; and
    (b) if the business carried on by the person is discontinued, whether before or after his death, his legal representative shall be liable to pay, out of the estate of the deceased, to the extent to which the estate is capable of meeting the charge, the tax, interest or penalty due from such person under this Act,
    whether such tax, interest or penalty has been determined before his death but has remained unpaid or is determined after his death.

    (2) Save as otherwise provided in the Insolvency and Bankruptcy Code, 2016, where a taxable person, liable to pay tax, interest or penalty under this Act, is a Hindu Undivided Family or an association of persons and the property of the Hindu Undivided Family or the association of persons is partitioned amongst the various members or groups of members, then, each member or group of members shall, jointly and severally, be liable to pay the tax, interest or penalty due from the taxable person under this Act up to the time of the partition whether such tax, penalty or interest has been determined before partition but has remained unpaid or is determined after the partition.

    (3) Save as otherwise provided in the Insolvency and Bankruptcy Code, 2016, where a taxable person, liable to pay tax, interest or penalty under this Act, is a firm, and the firm is dissolved, then, every person who was a partner shall, jointly and severally, be liable to pay the tax, interest or penalty due from the firm under this Act up to the time of dissolution whether such tax, interest or penalty has been determined before the dissolution, but has remained unpaid or is determined after dissolution.

    (4) Save as otherwise provided in the Insolvency and Bankruptcy Code, 2016, where a taxable person liable to pay tax, interest or penalty under this Act,
    (a) is the guardian of a ward on whose behalf the business is carried on by the guardian; or
    (b) is a trustee who carries on the business under a trust for a beneficiary,
    then, if the guardianship or trust is terminated, the ward or the beneficiary shall be liable to pay the tax, interest or penalty due from the taxable person upto the time of the termination of the guardianship or trust, whether such tax, interest or penalty has been determined before the termination of guardianship or trust but has remained unpaid or is determined thereafter.

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    93.1    Introduction
    This section discusses about the person liable to pay taxes, interest and penalty in certain situations viz., death of taxable person, partition of HUF/AOP, termination of guardianship or trust, dissolution of firm.
    93.2    Analysis
    Death of person (individual)
    (i)    If a person (an individual) who is liable to pay tax dies: –
    (a)    In case of continuation of business: the legal representative or the any other person who carries on the business after his death is liable to pay tax, interest, penalty or any other due which is due from the deceased person; or
    (b)    In case of discontinuation of business before or after his death: only the legal representative is liable to pay the tax, interest, penalty or any other dues to the government.
    (ii)    The liability of the legal representative in case of discontinued business is only to the extent of property or estate received from such deceased person.
    (iii)    The legal representative or any other person as the case may be is liable to pay the tax, interest or penalty whether-
    (a)    It has been determined before his death but has remained unpaid or
    (b)    It has been determined after his death
    Partition of HUF or AOP
    (i) In case of a HUF or AOP property is partitioned between the member or group of members then the liability to pay tax, interest or penalty
    — Is on each member or group of members (jointly and severally) who got a portion in that property.
    — The member or the group of members is/are liable only upto the time of partition whether such
    •    Tax, interest and penalty has been determined before partition but has remained unpaid or
    •    is determined after such partition
    Dissolution of firm
    (i)    In case the firm is dissolved-
    — Every person who was a partner upto the time of dissolution is jointly and severally liable to pay the tax, interest or penalty.
    —     The person who was a partner is liable to pay tax even if it is •     determined before dissolution but not paid or •     determined after dissolution.
    —     The provision applicable for partnership firm would equally apply for LLP as well.
    Termination of Guardianship or Trusteeship
    (ii)    In case the guardian is carrying on the business on behalf of a guardian of a ward or the trustee who carries the business under the trust on behalf of beneficiary, then on the termination of guardianship or trusteeship,
    — The ward or the beneficiary is liable to pay tax, interest or penalty upto the time of such termination.
    —     The ward or the beneficiary is liable to pay tax, interest or penalty
    •    determined before the termination of guardianship or trusteeship but not paid or
    •    determined after such termination
    The above provisions are applicable to extent there is no contrary provision in Insolvency and Bankruptcy Code, 2016.
    93.3 FAQs
    Q1. Can a legal representative be made liable for tax dues payable by a deceased person?
    Ans. Yes. Legal representative is made liable for the tax dues of the deceased person even if it is determined after death.
    Q2. To what extent tax dues of the deceased person could be recoverable from the legal representative?
    Ans. (a) In case of continuation of business: the legal representative or the any other person who carries on the business after his death is liable to pay tax, interest, penalty or any other due which is due from the deceased person; or
    (b) In case of discontinuation of business before or after his death : only the legal representative is liable to pay the tax, interest, penalty or any other dues to the government. The liability of the legal representative in case of discontinued business is only to the extent of property or estate received from such deceased person.
    Q3. In case of partition of HUF or AOP, what would be the extent of liability of members of the HUF/AOP?
    Ans. The member or the group of members is/are liable only upto the time of partition.
    Q4. In case of dissolution of a firm, upto which date the partners would be responsible to pay the tax dues?
    Ans. Every person who was a partner upto the time of dissolution is jointly and severally liable to pay the tax, interest or penalty
    93.4 MCQ
    Q1. Who is liable to pay tax if the business of an individual is discontinued before his death-
    (a)    Board of Directors or Manager
    (b)    Any member of his person who is willing to pay
    (c)    Legal representative of taxable person
    (d)    Employee
    Ans.  (c) Legal representative of taxable person
    Q2. The legal representative or any other person of an individual who is dead is liable to pay
    tax, only if –
    (a)    The business has been carried on by the legal representative
    (b)    The business has been carried by the legal representative or any other person
    (c)    The business has been carried by any other person (d)     None of the above.
    Ans. (b) The business has been carried on by the legal representative or any other person Q3. The dues recoverable under this section includes-
    (a)    Only Interest
    (b)    Any dues which are recoverable under this Act
    (c)    Only tax
    (d)    Only Penalty
    Ans. (b) Any dues which are recoverable under this Act
    Q4. As per this section, the member or group of members of HUF or AOP is/are liable to pay tax on taxable supplies – (a)     Even after its partition
    (b)    Upto the time of partition
    (c)    Both (a) and (b)
    (d)    None of the above
    Ans.  (b) Upto the time of partition

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