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

Mehta HUF, a registered taxable person, partitioned its property among members Raj, Sunil and a group comprising Tara and her son on 1 January. Tax of Rs 4,00,000 for periods up to partition was determined on 15 March, after partition. Raj has paid Rs 1,00,000 voluntarily. Which statement is correct?

Each member or group of members is jointly and severally liable for the tax due up to partition, even though it was determined later. After Raj's Rs 1,00,000, the unpaid Rs 3,00,000 can be recovered from any of Raj, Sunil or the group.

  1. ARaj, Sunil and the group are each liable only for one-third of Rs 4,00,000
  2. BOnly the karta is liable, as partition ends the HUF's status
  3. CLiability ceased because the tax was determined after the partition
  4. DEach member or group is jointly and severally liable for the tax due up to partition, so the unpaid balance can be recovered from any of themCorrect

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 partition, even if determined afterwards. The balance Rs 3,00,000 remains recoverable from any of them. Option A wrongly makes the liability several and proportionate.

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