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

Alpha Associates, a partnership of A and B, had unpaid GST of Rs 3,00,000 for FY 2023-24. On 1 October 2024, partner B retired and C was admitted, so the constitution changed. In the proceedings later, the officer determines the dues for the period before reconstitution. Which statement is correct as per the Act?

A, B and C are all jointly and severally liable. On a change in the constitution of a firm, partners both before and after the reconstitution answer for dues of any period before the reconstitution. The incoming partner C is therefore also liable, and the dues do not lapse.

  1. AOnly A and B, as the partners before reconstitution, are liable
  2. BOnly A and C, as the partners after reconstitution, are liable
  3. CA, B and C are jointly and severally liable, being partners before and after the reconstitutionCorrect
  4. DThe dues lapse because the constitution of the firm has changed

Explanation

Where the constitution of a firm changes, the partners as it existed before and as it exists after the reconstitution are jointly and severally liable for tax, interest or penalty for any period before reconstitution. So A, B and C are all liable. Option 1 or 2 limits the group wrongly.

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