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

Anand Associates LLP was registered under the LLP Act, 2008. Its constitution changed on 1 October when partner Kiran retired and partner Meera joined. Tax and interest for the period before 1 October were later found short-paid. Which statement is correct under the CGST Act, 2017?

Both the old partners and the new partners are jointly and severally liable for the dues of the period before reconstitution. An LLP is treated as a firm for this purpose, so Kiran and Meera, along with the other partners, can all be pursued.

  1. APartners as they existed before and as they exist after the reconstitution are jointly and severally liable for the dues of the earlier periodCorrect
  2. BOnly Kiran is liable since the dues relate to a period when he was a partner
  3. COnly the partners existing after reconstitution are liable since the firm continues
  4. DAn LLP is not treated as a firm for this purpose, so no partner is liable

Explanation

On a change in constitution of a firm, partners both before and after the reconstitution are jointly and severally liable for dues for any period before reconstitution. An LLP is expressly treated as a firm for this Chapter. Options B and C each wrongly restrict liability to one group of partners.

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