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

Nalini is the guardian of her minor nephew Om and carried on his trading business as guardian, being registered and liable to GST. The guardianship terminated when Om became a major on 1 June. In September, tax of Rs 1,20,000 was determined for a period before 1 June and remained unpaid. Who is liable under the CGST Act?

Om, the ward, is liable for the Rs 1,20,000. When a guardianship ends, the ward becomes liable for dues up to the termination, even if the amount is determined after the guardianship has ended.

  1. ANalini alone, since she carried on the business
  2. BOm, the ward, as liability up to termination of guardianship passes to him even if determined thereafterCorrect
  3. CNobody, because the tax was determined after the guardianship ended
  4. DNalini and Om equally, each for half the amount

Explanation

Where a guardian carries on business on behalf of a ward and the guardianship terminates, the ward is liable for tax, interest or penalty due up to the termination. This holds even if the amount is determined afterwards. So Om is liable for the Rs 1,20,000, and equal sharing is not provided.

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