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

Mr. Ramesh Iyer, a sole proprietor registered under GST, died on 10 June. His business was discontinued on the date of death. GST of Rs 3,00,000 relating to the period before his death was determined by the proper officer after his death. His estate is worth Rs 2,00,000. Which statement is correct as per the CGST Act, 2017?

The legal representative pays only out of the deceased's estate, up to what the estate can meet, here Rs 2,00,000. This applies whether tax was determined before or after death, and it does not reach the representative's personal assets when the business has been discontinued.

  1. AHis legal representative is liable to pay Rs 3,00,000 from his personal assets since the tax was determined after death
  2. BHis legal representative is liable to pay only out of the estate, to the extent the estate can meet the dues, so Rs 2,00,000Correct
  3. CNo liability arises because the business was discontinued on death and the tax was determined later
  4. DThe liability is limited to Rs 2,00,000 only if the tax had been determined before the death

Explanation

Where the business of a deceased person is discontinued, the legal representative is liable to pay out of the estate, to the extent the estate can meet the charge. This applies whether the tax was determined before or after death. Option A wrongly extends the liability to personal assets. Option D wrongly makes the timing of determination relevant.

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