GST Jamku AILiability in other cases
Section 94(1)
Where a taxable person is a firm or an association of persons or a Hindu Undivided Family and such firm, association or family has discontinued business—
(a) the tax, interest or penalty payable under this Act by such firm, association or family up to the date of such discontinuance may be determined as if no such discontinuance had taken place; and
(b) every person who, at the time of such discontinuance, was a partner of such firm, or a member of such association or family, shall, notwithstanding such discontinuance, jointly and severally, be liable for the payment of tax and interest determined and penalty imposed and payable by such firm, association or family, whether such tax and interest has been determined or penalty imposed prior to or after such discontinuance and subject as aforesaid, the provisions of this Act shall, so far as may be, apply as if every such person or partner or member were himself a taxable person.
Section 94(1) - Tax Liability in Case of Business Discontinuation
In situations where a taxable person operates as a firm, association of persons, or a Hindu Undivided Family (HUF) and decides to discontinue their business, certain provisions come into play to address tax, interest, and penalty matters.
(a) Determining Liabilities
The tax, interest, or penalty that the firm, association, or family is obligated to pay under this Act up to the date of discontinuance is assessed as if the business had not been discontinued. This ensures that any outstanding financial obligations are calculated considering the business's entire duration, up to the point of discontinuation.
(b) Joint Liability of Partners or Members
Regardless of the business discontinuation, every person who was a partner of the firm or a member of the association or family at the time of discontinuance becomes jointly and severally liable for the payment of determined tax, interest, and imposed penalty. This liability applies irrespective of whether the tax and interest were determined or the penalty was imposed before or after the business discontinuation. Essentially, the provisions of this Act treat each person, partner, or member as an individual taxable entity for the purpose of settling financial obligations.
Ensuring Continued Applicability Continued
Subject to the conditions mentioned above, the provisions of this Act continue to apply as if each person, partner, or member were an independent taxable entity. This ensures the seamless application of tax laws even in cases of business discontinuation.
Note: The term "Heading" has been omitted as it does not provide specific information.
Section 94(2)
Where a change has occurred in the constitution of a firm or an association of persons, the partners of the firm or members of association, as it existed before and as it exists after the reconstitution, shall, without prejudice to the provisions of section 90, jointly and severally, be liable to pay tax, interest or penalty due from such firm or association for any period before its reconstitution.
Changes in Firm or Association Constitution
When there is a change in the structure of a firm or an association of persons, the partners of the firm or the members of the association, both before and after the reconstitution, are jointly and severally responsible for paying any taxes, interest, or penalties owed by the firm or association for any period before its reconstitution. This liability is in addition to the rules outlined in section 90.
Section 94(3)
The provisions of sub-section (1) shall, so far as may be, apply where the taxable person, being a firm or association of persons is dissolved or where the taxable person, being a Hindu Undivided Family, has effected partition with respect to the business carried on by it and accordingly references in that sub-section to discontinuance shall be construed as reference to dissolution or to partition.
Explanation.—For the purposes of this Chapter,—
(i) a "Limited Liability Partnership" formed and registered under the provisions of the Limited Liability Partnership Act, 2008 (6 of 2009) shall also be considered as a firm;
(ii) "court" means the District Court, High Court or Supreme Court.
To navigate this legal terrain, it's important to understand the terms used in this chapter:
Limited Liability Partnership (LLP) If you're dealing with a "Limited Liability Partnership" established under the Limited Liability Partnership Act, 2008 (6 of 2009), it is to be treated on par with a firm. The rules that apply to firms extend to LLPs.
Definition of "Court" When the term "court" is mentioned, it encompasses the District Court, High Court, or Supreme Court. These legal entities play a role in interpreting and enforcing the regulations outlined in this chapter. Understanding these definitions is vital for a comprehensive grasp of the liabilities involved.