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

Meena, a minor, was carrying on a trading business through her guardian Suresh, who was registered under GST on her behalf. Suresh owed tax of Rs 2,50,000 up to 31 January, and the guardianship terminated on 31 January as Meena turned major. In March, the officer determines a further liability of Rs 40,000 on a transaction made on 15 January and also finds that Suresh had made a supply on 20 February, after the termination, on which Rs 30,000 of tax is unpaid. Meena took over the business from 1 February. What is Meena's liability for the guardian's dues under the provision for guardianship?

Meena is liable for Rs 2,90,000. On termination of guardianship the ward pays dues up to the time of termination, even if determined afterwards, so Rs 2,50,000 plus Rs 40,000 is included. The Rs 30,000 relating to a supply after termination is outside this provision.

  1. ARs 2,50,000 only, as the later determination is not covered
  2. BRs 3,20,000 including both the later determination and the February supply
  3. CRs 2,90,000, i.e. dues up to termination, including the amount determined afterwardsCorrect
  4. DNil, as the liability is that of the guardian alone

Explanation

On termination of guardianship, the ward is liable for tax due from the taxable person up to the time of termination, whether determined before or thereafter. So Rs 2,50,000 plus Rs 40,000 for the 15 January transaction equals Rs 2,90,000. The 20 February supply is after termination and is not covered by this provision, so Rs 3,20,000 is wrong (it adds Rs 30,000).

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