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

Kavya Textiles HUF, a registered taxable person, has a tax demand of ₹4,50,000 for the period up to 31 March. On 1 April the HUF property was partitioned among three members: Kavya (karta), her brother Mohan, and a group comprising two cousins. In June, the demand was confirmed. Which statement is correct under the CGST Act?

Each member or group of members is jointly and severally liable for the entire tax, interest or penalty due from the HUF up to the time of partition, even if determined after partition. Liability is not split equally and does not end with partition.

  1. AEach member or group of members is jointly and severally liable for the tax, interest or penalty due up to the time of partition, though determined afterwardsCorrect
  2. BOnly the karta is liable, as she signed the returns
  3. CLiability is divided equally at ₹1,50,000 each and cannot be recovered beyond that from any member
  4. DNo liability arises since the HUF stands dissolved by partition

Explanation

On partition of an HUF, each member or group of members is jointly and severally liable for tax, interest or penalty due up to the time of partition, whether determined before or after it. The equal split of ₹1,50,000 each is wrong because joint and several liability allows recovery of the full amount from any of them.

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