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CMA Intermediate · Direct and Indirect Taxation · Computation of GST Liability

Under the CGST Act, 2017, if a firm that is a taxable person is dissolved, how is the liability of persons who were its partners determined?

Every person who was a partner remains jointly and severally liable for tax, interest or penalty due from the firm up to the time of dissolution, whether it was determined before dissolution and left unpaid or is determined afterwards, as provided in Section 93(3).

  1. AEvery person who was a partner is jointly and severally liable for tax, interest or penalty due up to the time of dissolution, whether determined before or after dissolutionCorrect
  2. BLiability ends automatically on dissolution for amounts not yet determined
  3. CEach partner is liable only for the share of tax matching their capital contribution
  4. DOnly the partner who signed the last return is liable

Explanation

Section 93(3) provides that when a firm is dissolved, every person who was a partner is jointly and severally liable for tax, interest or penalty due up to the time of dissolution, whether it was determined before dissolution but unpaid or determined afterwards. The other options introduce limits that the Act does not provide.

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