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CA Final · Indirect Tax Laws · Liability to Pay in Certain Cases

A registered Hindu Undivided Family, Sharma HUF, carried on a trading business with members Mohan, Sohan and Rohan. On 1 April the HUF property was partitioned among the members. Later, a penalty relating to a period before 1 April was imposed on the HUF. Which statement is correct?

Each member or group of members is jointly and severally liable. When an HUF's property is partitioned, they must pay the tax, interest or penalty due up to the time of partition, even if it is determined later.

  1. AOnly the karta at the time of the penalty is liable
  2. BThe penalty lapses because the HUF has ceased to exist as a unit
  3. CEach member or group of members is jointly and severally liable for the penalty relating to the period up to partitionCorrect
  4. DOnly members who received immovable property in the partition are liable

Explanation

Where an HUF is partitioned, each member or group of members is jointly and severally liable for tax, interest or penalty due up to the time of partition. This applies even if the penalty is imposed after the partition. Lapse of liability is not provided.

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